GBP/USD. September 5th. The pound didn’t hesitate for long and followed the euro
September 5, 2023 4:23 pm
On the hourly chart, the GBP/USD pair rebounded from the corrective level of 100.0% (1.2590) on Monday. However, the upward movement was short-lived, and on Tuesday, the quotes closed below the level of 1.2590, allowing them to continue to fall towards the next level at 1.2513. A rebound from this level will favor the euro’s rise to 1.2590. Closing below 1.2513 increases the likelihood of further decline towards the next Fibonacci level of 127.2% (1.2440).
The waves are once again telling us about a “bearish” trend. Yesterday, there were doubts that the decline in quotes would continue because the information background for this week could be stronger. However, today, the pair headed downward, forming a new descending wave that broke the low of the previous one. Thus, there are no signs of the “bearish” trend ending.
There was no information background for the pound yesterday, and there is none today, as the economic events calendar does not contain any events related to the UK or the US. Therefore, traders did not hesitate long about what to do with the pound and followed the example of the bears on the euro. Since there will be few news and events this week, I still find it difficult to believe that the pound will continue to fall. At the same time, the chart pattern does not give any reason to assume that the bears will leave the market right now. The bulls may provide resistance, but the bears will continue to push the pair down.
Despite the not very sharp decline, the pound currently lacks buyer support. There are too many uncertainties with the Bank of England and its September rate decision. The market does not rule out that the British regulator will take a pause, but the probability of this is quite low.
On the 4-hour chart, the pair consolidated above the descending trend corridor. However, the rebound of quotes from the corrective level of 61.8% (1.2745) worked in favor of the US currency and the resumption of the decline. Closing below the level of 1.2620 increases the probability of a decline towards the next level at 1.2450. A “bullish” divergence is looming on the CCI indicator, which may temporarily pause the decline.
Commitments of Traders (COT) Report:
The sentiment of the “Non-commercial” traders’ category has become less “bullish” over the past reporting week. The number of long contracts in speculators’ hands 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 two-fold gap between the number of long and short contracts: 97 thousand versus 48 thousand. 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 expect a significant surge in the pound’s value. Over time, bulls will continue to liquidate their buy positions. The Bank of England can only alter the market situation if it continues to raise interest rates longer than planned.
News Calendar for the US and the UK:
On Tuesday, the economic events calendar does not contain any entries. For the rest of the day, the influence of the news background on market sentiment will be absent.
GBP/USD Forecast and Trader Tips:
Selling the pound was possible upon closing below 1.2590 with a target of 1.2513. However, the pair fell short of this target by only 10 points. I consider only one signal for buying today: a consolidation above the level of 1.2590. The target is 1.2720.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair rebounded from the corrective level of 100.0% (1.2590) on Monday. However, the upward movement was short-lived, and on Tuesday, the quotes closed below the level of 1.2590, allowing them to continue to fall towards the next level at 1.2513. A rebound from this level will favor the euro’s rise to 1.2590. Closing below 1.2513 increases the likelihood of further decline towards the next Fibonacci level of 127.2% (1.2440).
The waves are once again telling us about a “bearish” trend. Yesterday, there were doubts that the decline in quotes would continue because the information background for this week could be stronger. However, today, the pair headed downward, forming a new descending wave that broke the low of the previous one. Thus, there are no signs of the “bearish” trend ending.
There was no information background for the pound yesterday, and there is none today, as the economic events calendar does not contain any events related to the UK or the US. Therefore, traders did not hesitate long about what to do with the pound and followed the example of the bears on the euro. Since there will be few news and events this week, I still find it difficult to believe that the pound will continue to fall. At the same time, the chart pattern does not give any reason to assume that the bears will leave the market right now. The bulls may provide resistance, but the bears will continue to push the pair down.
Despite the not very sharp decline, the pound currently lacks buyer support. There are too many uncertainties with the Bank of England and its September rate decision. The market does not rule out that the British regulator will take a pause, but the probability of this is quite low.
On the 4-hour chart, the pair consolidated above the descending trend corridor. However, the rebound of quotes from the corrective level of 61.8% (1.2745) worked in favor of the US currency and the resumption of the decline. Closing below the level of 1.2620 increases the probability of a decline towards the next level at 1.2450. A “bullish” divergence is looming on the CCI indicator, which may temporarily pause the decline.
Commitments of Traders (COT) Report:
The sentiment of the “Non-commercial” traders’ category has become less “bullish” over the past reporting week. The number of long contracts in speculators’ hands 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 two-fold gap between the number of long and short contracts: 97 thousand versus 48 thousand. 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 expect a significant surge in the pound’s value. Over time, bulls will continue to liquidate their buy positions. The Bank of England can only alter the market situation if it continues to raise interest rates longer than planned.
News Calendar for the US and the UK:
On Tuesday, the economic events calendar does not contain any entries. For the rest of the day, the influence of the news background on market sentiment will be absent.
GBP/USD Forecast and Trader Tips:
Selling the pound was possible upon closing below 1.2590 with a target of 1.2513. However, the pair fell short of this target by only 10 points. I consider only one signal for buying today: a consolidation above the level of 1.2590. The target is 1.2720.
The material has been provided by InstaForex Company – www.instaforex.com
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