GBP/USD. November 3rd. The Bank of England takes a second pause in a row
November 3, 2023 1:23 pm
On the hourly chart, the GBP/USD pair confirmed yesterday’s close above the level of 1.2175, allowing traders to expect further growth towards the next corrective level of 161.8% (1.2250). A bounce from this level will work in favor of the US dollar, leading to a decline towards 1.2175. Closing quotes below the level of 1.2175 will also indicate the potential for a pair to fall towards 1.2106.
The wave situation at the moment is very ambiguous. All recent waves are almost the same size, and their peaks and lows are breaking poorly. The last downward wave did not break the low of the previous one, but the last upward wave broke the peak of the previous one. Thus, the horizontal movement has transitioned into a weak “bullish” trend, with no signs of completion as of now. These signs may appear when the price drops below the level of 1.2106.
Yesterday, traders were fully focused on the Bank of England’s meeting but were disappointed. The regulator, for the second time in a row, did not change the interest rate. Such a decision was not a surprise for traders, but their reaction was undeserved. The Bank of England’s press release stated that quantitative easing would remain in place for a considerable period, and in the case of new risks of accelerating inflation, an interest rate hike might be possible. Thus, the Bank of England left the door open for further tightening but gave no hints about when it might happen. The pound slightly strengthened on this information, but very weakly. Bullish traders did not see anything that could support them for a long time.
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 has begun. Quotes closed above the descending trend corridor, but it remains very difficult to expect further pound growth. There are no emerging divergences with any of the indicators today. A bounce from the level of 1.2035 will allow for the anticipation of a new rise in the pound.
Commitments of Traders (COT) Report:
The sentiment of “non-commercial” traders in the latest 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 other direction: 67 thousand against 86 thousand. In my opinion, there are excellent prospects for the pound to continue its decline. I do not expect a strong pound rally in the near future. I believe that over time, the bulls will continue to liquidate their buy positions, just as with the European currency.
News Calendar for the USA and the UK:
Britain – Business Activity Index in the Services Sector (09:30 UTC).
USA – Average Hourly Earnings (12:30 UTC).
USA – Nonfarm Payrolls Change (08:55 UTC).
USA – Unemployment Rate (12:30 UTC).
USA – ISM Non-Manufacturing Purchasing Managers’ Index (14:00 UTC).
On Friday, the economic events calendar includes five quite important entries, with the most significant ones in the USA. The impact of the news background on market sentiment for the remaining part of the day will be strong.
Forecast for GBP/USD and trader advice:
Selling the British pound is possible today if there is a reversal around the level of 1.2198, a bounce from 1.2250, or if it closes below 1.2175 on the hourly chart with a target of 1.2106. Buying opportunities were possible on a bounce from 1.2106, with a target of 1.2175. This target has been achieved. New buying opportunities arise on a bounce from the level of 1.2106, with targets at 1.2175 and 1.2198.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair confirmed yesterday’s close above the level of 1.2175, allowing traders to expect further growth towards the next corrective level of 161.8% (1.2250). A bounce from this level will work in favor of the US dollar, leading to a decline towards 1.2175. Closing quotes below the level of 1.2175 will also indicate the potential for a pair to fall towards 1.2106.
The wave situation at the moment is very ambiguous. All recent waves are almost the same size, and their peaks and lows are breaking poorly. The last downward wave did not break the low of the previous one, but the last upward wave broke the peak of the previous one. Thus, the horizontal movement has transitioned into a weak “bullish” trend, with no signs of completion as of now. These signs may appear when the price drops below the level of 1.2106.
Yesterday, traders were fully focused on the Bank of England’s meeting but were disappointed. The regulator, for the second time in a row, did not change the interest rate. Such a decision was not a surprise for traders, but their reaction was undeserved. The Bank of England’s press release stated that quantitative easing would remain in place for a considerable period, and in the case of new risks of accelerating inflation, an interest rate hike might be possible. Thus, the Bank of England left the door open for further tightening but gave no hints about when it might happen. The pound slightly strengthened on this information, but very weakly. Bullish traders did not see anything that could support them for a long time.
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 has begun. Quotes closed above the descending trend corridor, but it remains very difficult to expect further pound growth. There are no emerging divergences with any of the indicators today. A bounce from the level of 1.2035 will allow for the anticipation of a new rise in the pound.
Commitments of Traders (COT) Report:
The sentiment of “non-commercial” traders in the latest 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 other direction: 67 thousand against 86 thousand. In my opinion, there are excellent prospects for the pound to continue its decline. I do not expect a strong pound rally in the near future. I believe that over time, the bulls will continue to liquidate their buy positions, just as with the European currency.
News Calendar for the USA and the UK:
Britain – Business Activity Index in the Services Sector (09:30 UTC).
USA – Average Hourly Earnings (12:30 UTC).
USA – Nonfarm Payrolls Change (08:55 UTC).
USA – Unemployment Rate (12:30 UTC).
USA – ISM Non-Manufacturing Purchasing Managers’ Index (14:00 UTC).
On Friday, the economic events calendar includes five quite important entries, with the most significant ones in the USA. The impact of the news background on market sentiment for the remaining part of the day will be strong.
Forecast for GBP/USD and trader advice:
Selling the British pound is possible today if there is a reversal around the level of 1.2198, a bounce from 1.2250, or if it closes below 1.2175 on the hourly chart with a target of 1.2106. Buying opportunities were possible on a bounce from 1.2106, with a target of 1.2175. This target has been achieved. New buying opportunities arise on a bounce from the level of 1.2106, with targets at 1.2175 and 1.2198.
The material has been provided by InstaForex Company – www.instaforex.com
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