GBP/USD. August 3rd. The British pound reached its lowest level a month before the Bank of England meeting
August 3, 2023 12:23 pm
The GBP/USD pair declined below the corrective level of 76.4% (1.2720) on the hourly chart. As a result, today, based on the graphical analysis, it may continue its downward movement toward the next corrective level at 100.0% (1.2591). However, the focus will be on the news background in the next few hours, which could lead to growth or decline. The outcome will depend more on the Bank of England’s decisions than graphical signals.
The waves still indicate one thing: the bearish trend persists. The situation may change slightly today or tomorrow, but there are no signs of a trend reversal for now.
The news background for the pound has been similar. The ADP report helped the dollar strengthen its position further, but today and tomorrow, the bears might withdraw from the market if the Bank of England takes a more hawkish stance than traders expect. The current interest rate is 5%, making it increasingly difficult to anticipate hawkish rhetoric from the regulator in subsequent meetings.
Tomorrow, the reports on salaries, unemployment, and payrolls in America will be enormously important for the dollar. If these reports show weaker values than forecasted, the bears might withdraw temporarily. However, I expect a new rise in the American currency in the long term.
On the 4-hour chart, the pair closed below the ascending trendline and the Fibonacci level of 61.8% (1.2745). Consequently, the quote decline may continue toward the next level at 1.2485. As mentioned before, everything will depend on the information from the UK and the USA today and tomorrow, and we can return to a graphical analysis on Monday. Currently, no divergences are observed in any indicators.
Commitments of Traders (COT) report:
The sentiment of “Non-commercial” traders became less bullish during the last reporting week. The number of long contracts held by speculators decreased by 29,771 units, while the number of short contracts decreased by 25,037. Major players still hold a fully bullish sentiment, with a twofold gap between the number of long and short contracts: 105,000 versus 46,000. The British pound has decent prospects for further growth. Still, the news background from the UK is not always favorable, and the graphical analysis hints at a trend reversal, suggesting that bears might take the initiative. It is increasingly difficult to expect a significant rise in the pound sterling. The market has yet to factor in many dollar-supporting factors, and the Bank of England’s expectations of further rate hikes mostly drove the recent pound rise.
News calendar for the USA and the UK:
United Kingdom – Bank of England Interest Rate Decision (11:00 UTC).
United Kingdom – Bank of England Monetary Policy Summary (11:00 UTC).
USA – Services Purchasing Managers’ Index (PMI) (13:45 UTC).
USA – Composite Purchasing Managers’ Index (PMI) (13:45 UTC).
USA – Institute for Supply Management (ISM) Non-Manufacturing PMI (14:00 UTC).
Thursday’s economic schedule is filled with significant events. All traders will focus closely on the Bank of England’s interest rate decision and the accompanying monetary policy summary. The impact of the news background could have a highly significant effect for the remainder of the day.
GBP/USD Forecast and Trading Advice:
I recommended selling the British pound on the bounce back from the 1.2866 level on the hourly chart, targeting 1.2801 and 1.2720. Both targets have been achieved, and there have been no buying signals. Positions can be left open with a target of 1.2591 while setting a stop-loss. Buying the pound is possible if it establishes itself above the 1.2720 level on the hourly chart, with targets at 1.2801 and 1.2866.
The material has been provided by InstaForex Company – www.instaforex.com
The GBP/USD pair declined below the corrective level of 76.4% (1.2720) on the hourly chart. As a result, today, based on the graphical analysis, it may continue its downward movement toward the next corrective level at 100.0% (1.2591). However, the focus will be on the news background in the next few hours, which could lead to growth or decline. The outcome will depend more on the Bank of England’s decisions than graphical signals.
The waves still indicate one thing: the bearish trend persists. The situation may change slightly today or tomorrow, but there are no signs of a trend reversal for now.
The news background for the pound has been similar. The ADP report helped the dollar strengthen its position further, but today and tomorrow, the bears might withdraw from the market if the Bank of England takes a more hawkish stance than traders expect. The current interest rate is 5%, making it increasingly difficult to anticipate hawkish rhetoric from the regulator in subsequent meetings.
Tomorrow, the reports on salaries, unemployment, and payrolls in America will be enormously important for the dollar. If these reports show weaker values than forecasted, the bears might withdraw temporarily. However, I expect a new rise in the American currency in the long term.
On the 4-hour chart, the pair closed below the ascending trendline and the Fibonacci level of 61.8% (1.2745). Consequently, the quote decline may continue toward the next level at 1.2485. As mentioned before, everything will depend on the information from the UK and the USA today and tomorrow, and we can return to a graphical analysis on Monday. Currently, no divergences are observed in any indicators.
Commitments of Traders (COT) report:
The sentiment of “Non-commercial” traders became less bullish during the last reporting week. The number of long contracts held by speculators decreased by 29,771 units, while the number of short contracts decreased by 25,037. Major players still hold a fully bullish sentiment, with a twofold gap between the number of long and short contracts: 105,000 versus 46,000. The British pound has decent prospects for further growth. Still, the news background from the UK is not always favorable, and the graphical analysis hints at a trend reversal, suggesting that bears might take the initiative. It is increasingly difficult to expect a significant rise in the pound sterling. The market has yet to factor in many dollar-supporting factors, and the Bank of England’s expectations of further rate hikes mostly drove the recent pound rise.
News calendar for the USA and the UK:
United Kingdom – Bank of England Interest Rate Decision (11:00 UTC).
United Kingdom – Bank of England Monetary Policy Summary (11:00 UTC).
USA – Services Purchasing Managers’ Index (PMI) (13:45 UTC).
USA – Composite Purchasing Managers’ Index (PMI) (13:45 UTC).
USA – Institute for Supply Management (ISM) Non-Manufacturing PMI (14:00 UTC).
Thursday’s economic schedule is filled with significant events. All traders will focus closely on the Bank of England’s interest rate decision and the accompanying monetary policy summary. The impact of the news background could have a highly significant effect for the remainder of the day.
GBP/USD Forecast and Trading Advice:
I recommended selling the British pound on the bounce back from the 1.2866 level on the hourly chart, targeting 1.2801 and 1.2720. Both targets have been achieved, and there have been no buying signals. Positions can be left open with a target of 1.2591 while setting a stop-loss. Buying the pound is possible if it establishes itself above the 1.2720 level on the hourly chart, with targets at 1.2801 and 1.2866.
The material has been provided by InstaForex Company – www.instaforex.com
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