GBP/USD. November 1st. FOMC meeting: The market’s reaction could be modest
November 1, 2023 12:24 pm
On the hourly chart, the GBP/USD pair rose to the level of 1.2175 on Tuesday, but a reversal in favor of the US dollar followed, and a new decline towards the level of 1.2106 began. Lately, the pair has spent a lot of time between the levels of 1.2106 and 1.2175. A rebound from the level of 1.2106 will again work in favor of the British pound and a return to 1.2175. If the quotes are fixed below 1.2106, it will increase the chances of further decline towards the next corrective level of 200.0% (1.2039).
The wave situation is currently quite ambiguous. Last week, we saw a strong downward wave that broke through the lows of the last four descending waves. Consequently, the “bearish” trend has resumed. At the moment, an upward wave is forming, which has already broken through the last peak, so the trend has once again changed to “bullish.” However, when looking at the chart in general, it seems that the movement is horizontal. This means that trends can change quite frequently.
On Tuesday, there was no significant news in the UK or the US. Nevertheless, the British pound was quite active in both directions. And today, the parade of important reports and events begins, and trader activity may increase even more. The most important event of the day is the FOMC meeting. The interest rate is likely to remain at the same level (5.5%), and the post-meeting statement is unlikely to be rich in “dovish” or “hawkish” theses. I think we can expect alternating growth and decline of the GBP/USD pair in the evening. Or vice versa. In this sense, reports from the US labor market, unemployment, and ISM are even more important.
On the 4-hour chart, the pair rebounded from the corrective level of 50.0% (1.2289) and reversed in favor of the US dollar. A new decline towards the level of 1.2035 began. Quotes closed above the descending trend corridor, but it remains very difficult to expect further growth in the pound. No new impending divergences are observed in any of the indicators. A rebound from the level of 1.2035 will allow us to expect a new rise in the British pound.
Commitments of Traders (COT) Report:
The mood of the “non-commercial” trader category in the last report has become more “bearish.” The number of long contracts held by speculators increased by 1582 units, while the number of short contracts increased by 9009 units. The overall sentiment of large players has shifted to “bearish,” and the gap between the number of long and short contracts is widening, but now in the opposite direction: 67,000 against 86,000. In my opinion, the British pound still has excellent prospects for further declines. I don’t expect a strong rise in the pound sterling in the near future. I believe that over time, bulls will continue to get rid of buy positions, as is the case with the European currency.
News Calendar for the US and the UK:
USA – Change in Non-Farm Employment from ADP (12:15 UTC).
USA – Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) (14:00 UTC).
USA – Job Openings and Labor Turnover Survey (JOLTS) (14:00 UTC).
USA – Federal Reserve (FOMC) Interest Rate Decision (18.00 UTC).
USA – Federal Open Market Committee (FOMC) Statement (18:00 UTC).
USA – Federal Open Market Committee (FOMC) Press Conference (18:00 UTC).
On Wednesday, the economic events calendar includes a large number of important entries. The impact of the news background on market sentiment for the remaining part of the day will be significant.
Forecast for GBP/USD and trader recommendations:
Selling the British pound is possible today on a rebound from the 1.2175 level on the hourly chart, with a target of 1.2106. Buying opportunities were available on a rebound from 1.2106, with a target of 1.2175. This target has been met. New buying opportunities can arise on a close above 1.2175 with a target of 1.2250. Or on a new rebound from the 1.2106 level.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair rose to the level of 1.2175 on Tuesday, but a reversal in favor of the US dollar followed, and a new decline towards the level of 1.2106 began. Lately, the pair has spent a lot of time between the levels of 1.2106 and 1.2175. A rebound from the level of 1.2106 will again work in favor of the British pound and a return to 1.2175. If the quotes are fixed below 1.2106, it will increase the chances of further decline towards the next corrective level of 200.0% (1.2039).
The wave situation is currently quite ambiguous. Last week, we saw a strong downward wave that broke through the lows of the last four descending waves. Consequently, the “bearish” trend has resumed. At the moment, an upward wave is forming, which has already broken through the last peak, so the trend has once again changed to “bullish.” However, when looking at the chart in general, it seems that the movement is horizontal. This means that trends can change quite frequently.
On Tuesday, there was no significant news in the UK or the US. Nevertheless, the British pound was quite active in both directions. And today, the parade of important reports and events begins, and trader activity may increase even more. The most important event of the day is the FOMC meeting. The interest rate is likely to remain at the same level (5.5%), and the post-meeting statement is unlikely to be rich in “dovish” or “hawkish” theses. I think we can expect alternating growth and decline of the GBP/USD pair in the evening. Or vice versa. In this sense, reports from the US labor market, unemployment, and ISM are even more important.
On the 4-hour chart, the pair rebounded from the corrective level of 50.0% (1.2289) and reversed in favor of the US dollar. A new decline towards the level of 1.2035 began. Quotes closed above the descending trend corridor, but it remains very difficult to expect further growth in the pound. No new impending divergences are observed in any of the indicators. A rebound from the level of 1.2035 will allow us to expect a new rise in the British pound.
Commitments of Traders (COT) Report:
The mood of the “non-commercial” trader category in the last report has become more “bearish.” The number of long contracts held by speculators increased by 1582 units, while the number of short contracts increased by 9009 units. The overall sentiment of large players has shifted to “bearish,” and the gap between the number of long and short contracts is widening, but now in the opposite direction: 67,000 against 86,000. In my opinion, the British pound still has excellent prospects for further declines. I don’t expect a strong rise in the pound sterling in the near future. I believe that over time, bulls will continue to get rid of buy positions, as is the case with the European currency.
News Calendar for the US and the UK:
USA – Change in Non-Farm Employment from ADP (12:15 UTC).
USA – Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) (14:00 UTC).
USA – Job Openings and Labor Turnover Survey (JOLTS) (14:00 UTC).
USA – Federal Reserve (FOMC) Interest Rate Decision (18.00 UTC).
USA – Federal Open Market Committee (FOMC) Statement (18:00 UTC).
USA – Federal Open Market Committee (FOMC) Press Conference (18:00 UTC).
On Wednesday, the economic events calendar includes a large number of important entries. The impact of the news background on market sentiment for the remaining part of the day will be significant.
Forecast for GBP/USD and trader recommendations:
Selling the British pound is possible today on a rebound from the 1.2175 level on the hourly chart, with a target of 1.2106. Buying opportunities were available on a rebound from 1.2106, with a target of 1.2175. This target has been met. New buying opportunities can arise on a close above 1.2175 with a target of 1.2250. Or on a new rebound from the 1.2106 level.
The material has been provided by InstaForex Company – www.instaforex.com
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