GBP/USD. September 4th. UK Finance Minister: inflation may rise in September
September 4, 2023 11:22 am
On the hourly chart, the GBP/USD pair executed a new reversal in favor of the US dollar on Friday, dropping to the corrective level of 100.0% (1.2590). On Monday, the rebound from this level worked in favor of the British pound, initiating an ascent towards the Fibonacci level of 76.4% (1.2720). If the pair’s exchange rate stays below 1.2590, the likelihood of further declines towards the next level at 1.2513 increases.
The waves are once again indicating a “bearish” trend. It’s hard to categorize the movement of the past two days as a trend, but the bears are still trying. There are no signs of the current trend ending. To see those signs, we would need to see a breach of Friday’s peak or a new downward wave that doesn’t break the Friday low. As of now, neither of those has occurred. Therefore, after a slight retracement upward, the decline may resume.
Much has already been said about the US reports from Friday. The US data didn’t favor the dollar, but the US currency still strengthened. We have a graphical buying signal (a rebound from 1.2590), so growth is possible today, as with the euro. The question is how strong it will be.
On Monday, UK Finance Minister Jeremy Hunt made a statement. He mentioned that the country’s government, in collaboration with the Bank of England, continues to adhere to the plan of halving inflation. Hunt also stated that inflation might spike in September, but it will decrease by half by the end of the year, as the central bank intends. The minister’s statement needs to clarify whether the Bank of England will raise rates this year. It’s likely, but the extent of the increase remains uncertain. The British pound doesn’t have much informational support on Monday but may show growth thanks to the graphical signal.
On the 4-hour chart, the pair has solidified its position above the descending trend corridor. However, the rebound from this level worked in favor of the US currency and the resumption of the decline. A “bullish” divergence has formed on the CCI indicator, which is the second graphical signal for the pound’s rise. Therefore, today, I anticipate an increase in the pair.
Commitments of Traders (COT) Report:
The sentiment among “Non-commercial” traders in the last reporting week has become less “bullish.” The number of long contracts held by speculators decreased by 918 units, while the number of short contracts increased by 9788. The overall sentiment among major players remains “bullish,” but there is now an almost twofold gap between the number of long and short contracts: 97,000 versus 48,000. The British pound had decent prospects for continued growth a few weeks ago, but now, many factors have favored the US dollar. I do not anticipate a strong rally in the pound. Over time, the bulls will continue to reduce their buy positions. The market situation can only change if the Bank of England raises rates longer than planned.
Economic Calendar for the US and the UK:
On Monday, the economic events calendar does not contain any entries. For the remainder of the day, the impact of the information background on market sentiment will be absent.
Forecast for GBP/USD and trading advice:
Short positions in the British pound were possible on the rebound from the 1.2745 level on the 4-hour chart, with a target at 1.2620. The target has been achieved. New short positions can be considered on a close below 1.2590 with a target at 1.2513. For long positions, I believe there is only one possible signal today – a rebound from 1.2590. The target would be 1.2720.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair executed a new reversal in favor of the US dollar on Friday, dropping to the corrective level of 100.0% (1.2590). On Monday, the rebound from this level worked in favor of the British pound, initiating an ascent towards the Fibonacci level of 76.4% (1.2720). If the pair’s exchange rate stays below 1.2590, the likelihood of further declines towards the next level at 1.2513 increases.
The waves are once again indicating a “bearish” trend. It’s hard to categorize the movement of the past two days as a trend, but the bears are still trying. There are no signs of the current trend ending. To see those signs, we would need to see a breach of Friday’s peak or a new downward wave that doesn’t break the Friday low. As of now, neither of those has occurred. Therefore, after a slight retracement upward, the decline may resume.
Much has already been said about the US reports from Friday. The US data didn’t favor the dollar, but the US currency still strengthened. We have a graphical buying signal (a rebound from 1.2590), so growth is possible today, as with the euro. The question is how strong it will be.
On Monday, UK Finance Minister Jeremy Hunt made a statement. He mentioned that the country’s government, in collaboration with the Bank of England, continues to adhere to the plan of halving inflation. Hunt also stated that inflation might spike in September, but it will decrease by half by the end of the year, as the central bank intends. The minister’s statement needs to clarify whether the Bank of England will raise rates this year. It’s likely, but the extent of the increase remains uncertain. The British pound doesn’t have much informational support on Monday but may show growth thanks to the graphical signal.
On the 4-hour chart, the pair has solidified its position above the descending trend corridor. However, the rebound from this level worked in favor of the US currency and the resumption of the decline. A “bullish” divergence has formed on the CCI indicator, which is the second graphical signal for the pound’s rise. Therefore, today, I anticipate an increase in the pair.
Commitments of Traders (COT) Report:
The sentiment among “Non-commercial” traders in the last reporting week has become less “bullish.” The number of long contracts held by speculators decreased by 918 units, while the number of short contracts increased by 9788. The overall sentiment among major players remains “bullish,” but there is now an almost twofold gap between the number of long and short contracts: 97,000 versus 48,000. The British pound had decent prospects for continued growth a few weeks ago, but now, many factors have favored the US dollar. I do not anticipate a strong rally in the pound. Over time, the bulls will continue to reduce their buy positions. The market situation can only change if the Bank of England raises rates longer than planned.
Economic Calendar for the US and the UK:
On Monday, the economic events calendar does not contain any entries. For the remainder of the day, the impact of the information background on market sentiment will be absent.
Forecast for GBP/USD and trading advice:
Short positions in the British pound were possible on the rebound from the 1.2745 level on the 4-hour chart, with a target at 1.2620. The target has been achieved. New short positions can be considered on a close below 1.2590 with a target at 1.2513. For long positions, I believe there is only one possible signal today – a rebound from 1.2590. The target would be 1.2720.
The material has been provided by InstaForex Company – www.instaforex.com
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