GBP/USD. September 14th. The pound stays sideways amid unfavorable UK statistics
September 14, 2023 11:23 am
On the hourly chart, the GBP/USD pair experienced a new drop to the Fibonacci level of 127.2% (1.2440), followed by a rebound and a reversal in favor of the British pound with a rise of 1.2513. A rebound of quotes from this level will favor the US dollar and a resumption of the decline towards the level of 1.2440. Closing above 1.2513 does not guarantee further growth, but it slightly increases the likelihood of its continuation towards the Fibonacci level of 100.0% (1.2590). The current movement resembles a horizontal rather than a trending one.
The wave situation became significantly more interesting yesterday. The last downward wave broke the low of the previous wave but did not go so deeply. The level of 1.2440 is holding the pound from further decline, and I won’t conclude the resumption of the bearish trend just yet, although the first sign of this has been received. If the current upward wave does not break the previous peak, it will be the second sign of the bearish trend resuming, but we can state this with confidence only after a close below the level of 1.2440.
GDP in the United Kingdom is shrinking, and industrial production is falling. Along with them, the British pound sterling fell yesterday. In the second half of the day, the situation for the pound was slightly corrected by the US inflation report, which rose to 3.7% y/y. However, in this situation, I bet on the continued decline of the pair. All of yesterday’s reports pointed to the strengthening of the dollar, and only the level of 1.2440 prevented the bears from developing their success. Thus, we currently have two important factors: horizontal movement and the level of 1.2440.
Today’s ECB meeting will have more to do with the euro, but the pound may also react. In the current circumstances, a decline in the pair is more likely.
On the 4-hour chart, the pair continues to decline despite a previous close above the descending trend corridor. The rebound of quotes from the level of 1.2450 favored the British pound, but the rise was very weak. A new rebound will again allow us to count on growth towards the upper boundary of the corridor. A more significant rise in the pound can be expected only after quotes firmly close above the corridor. Closing the pair’s rate below the level of 1.2450 will increase the chances of a further decline in the pound towards the Fibonacci level of 50.0% (1.2289).
Commitments of Traders (COT) Report:
The sentiment of “Non-commercial” traders in the last reporting week has become less “bullish.” The number of long contracts held by speculators decreased by 4498 units, while the number of short contracts decreased by 2481. The overall sentiment of large players remains “bullish,” with a two-fold gap between the number of long and short contracts: 92 thousand versus 46 thousand. The British pound had decent prospects for further growth several weeks ago, but now, many factors have favored the US dollar. I don’t expect a strong pound rally soon. Over time, bulls will continue to unwind their buy positions. The Bank of England can only change the market situation if it continues to raise interest rates for longer than planned.
Economic Calendar for the US and the UK:
US – Retail Sales Core (12:30 UTC).
US – Producer Price Index (PPI) (12:30 UTC).
US – Retail Sales (12:30 UTC).
US – Initial Jobless Claims (12:30 UTC).
On Thursday, the economic events calendar includes four moderately significant entries. The impact of the news on market sentiment for the remaining part of the day may have moderate strength.
Forecast for GBP/USD and trading advice:
Selling the British pound is possible today upon a rebound from the level of 1.2513 with a target of 1.2440 or upon closing below 1.2440. For buying, a rebound from the level of 1.2440 with a target of 1.2513 or closing above 1.2513 with a target of 50-60 points higher is necessary.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair experienced a new drop to the Fibonacci level of 127.2% (1.2440), followed by a rebound and a reversal in favor of the British pound with a rise of 1.2513. A rebound of quotes from this level will favor the US dollar and a resumption of the decline towards the level of 1.2440. Closing above 1.2513 does not guarantee further growth, but it slightly increases the likelihood of its continuation towards the Fibonacci level of 100.0% (1.2590). The current movement resembles a horizontal rather than a trending one.
The wave situation became significantly more interesting yesterday. The last downward wave broke the low of the previous wave but did not go so deeply. The level of 1.2440 is holding the pound from further decline, and I won’t conclude the resumption of the bearish trend just yet, although the first sign of this has been received. If the current upward wave does not break the previous peak, it will be the second sign of the bearish trend resuming, but we can state this with confidence only after a close below the level of 1.2440.
GDP in the United Kingdom is shrinking, and industrial production is falling. Along with them, the British pound sterling fell yesterday. In the second half of the day, the situation for the pound was slightly corrected by the US inflation report, which rose to 3.7% y/y. However, in this situation, I bet on the continued decline of the pair. All of yesterday’s reports pointed to the strengthening of the dollar, and only the level of 1.2440 prevented the bears from developing their success. Thus, we currently have two important factors: horizontal movement and the level of 1.2440.
Today’s ECB meeting will have more to do with the euro, but the pound may also react. In the current circumstances, a decline in the pair is more likely.
On the 4-hour chart, the pair continues to decline despite a previous close above the descending trend corridor. The rebound of quotes from the level of 1.2450 favored the British pound, but the rise was very weak. A new rebound will again allow us to count on growth towards the upper boundary of the corridor. A more significant rise in the pound can be expected only after quotes firmly close above the corridor. Closing the pair’s rate below the level of 1.2450 will increase the chances of a further decline in the pound towards the Fibonacci level of 50.0% (1.2289).
Commitments of Traders (COT) Report:
The sentiment of “Non-commercial” traders in the last reporting week has become less “bullish.” The number of long contracts held by speculators decreased by 4498 units, while the number of short contracts decreased by 2481. The overall sentiment of large players remains “bullish,” with a two-fold gap between the number of long and short contracts: 92 thousand versus 46 thousand. The British pound had decent prospects for further growth several weeks ago, but now, many factors have favored the US dollar. I don’t expect a strong pound rally soon. Over time, bulls will continue to unwind their buy positions. The Bank of England can only change the market situation if it continues to raise interest rates for longer than planned.
Economic Calendar for the US and the UK:
US – Retail Sales Core (12:30 UTC).
US – Producer Price Index (PPI) (12:30 UTC).
US – Retail Sales (12:30 UTC).
US – Initial Jobless Claims (12:30 UTC).
On Thursday, the economic events calendar includes four moderately significant entries. The impact of the news on market sentiment for the remaining part of the day may have moderate strength.
Forecast for GBP/USD and trading advice:
Selling the British pound is possible today upon a rebound from the level of 1.2513 with a target of 1.2440 or upon closing below 1.2440. For buying, a rebound from the level of 1.2440 with a target of 1.2513 or closing above 1.2513 with a target of 50-60 points higher is necessary.
The material has been provided by InstaForex Company – www.instaforex.com
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