GBP/USD. December 31. COT report. The British Parliament has approved a trade agreement with the European Union. The deal
GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair continued the growth process on December 30 and closed above the level of 1.3618. Thus, the growth process can now be continued in the direction of the next corrective level of 261.8% (1.3698). Bull traders are once again in a state of euphoria. Brexit is finally over. The UK Parliament voted for the trade deal bill yesterday and passed it almost unanimously. 521 deputies are in favor of the deal and only 73 of them are against it. Boris Johnson himself and European Commission President Ursula von der Leyen signed a trade agreement remotely yesterday. “Brexit is not the end, but the beginning of something new. Now we have a great responsibility: to make the best use of the power and the tools that we have once again got on our hands,” Boris Johnson said. Thus, the Brexit saga can officially be considered complete. Traders will now be keeping a close eye on how Boris Johnson will “lift the UK off its knees”. Many analysts are very skeptical about this. Britain may benefit from its independence in the long run, but economists expect more cuts in the British economy in the coming quarters. Even though a free trade agreement has been concluded.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a reversal in favor of the British currency and continued the growth process in the direction of the corrective level of 127.2% (1.3701). The rebound of quotes from this Fibo level will work in favor of the US currency and the beginning of the fall in the direction of the corrective level of 100.0% (1.3481). Fixing the pair’s rate above the level of 127.2% will increase the probability of further growth in the direction of the next corrective level of 161.8% (1.3977).
GBP/USD – Daily.
On the daily chart, the pair’s quotes performed a consolidation above the corrective level of 100.0% (1.3513). Thus, the growth process can be continued in the direction of the next Fibo level of 127.2% (1.4084).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed an increase to the second downward trend line. A rebound from it in the long term will mean a reversal in favor of the US dollar and a long fall in the British dollar’s quotes.
Overview of fundamentals:
There were no economic reports or other developments in the UK and the US on Wednesday. The information background was completely absent. Except for the pompous news regarding the signing of a trade deal.
The economic calendar for the US and the UK:
US – number of initial and repeated applications for unemployment benefits (13:30 GMT).
On December 31, the calendar of economic events in the UK and the US are almost empty. The information background will be absent today.
COT (Commitments of Traders) report:
The latest COT report showed that speculators were getting rid of both long and short contracts. The new COT report, which was released only last night, showed only small changes in the mood of major traders. The “Non-commercial” category of traders opened in the reporting week until December 21 – 2,000 new long contracts and 500 short contracts. Such figures do not allow us to draw any serious conclusions about the future of the British pound. It can be noted that speculators again increased purchases of the British, but this was already 8 days ago. The total number of long contracts focused on the hands of speculators is only 8,000 more than short contracts. For example, the difference in the euro currency is 3 times. Thus, I still can not conclude that the mood for the British is exclusively “bullish” and that the pound will continue to grow.
GBP/USD forecast and recommendations for traders:
It was recommended to open new purchases of the British dollar in case of consolidation above the level of 1.3618 on the hourly chart with targets of 1.3698 and 1.3800. I recommend selling the pound at a rebound from the corrective level of 127.2% on the 4-hour chart with targets of 1.3618 and 1.3499.
“Non-commercial” – major market players: banks, hedge funds, investment funds, private, large investors.
“Commercial” – commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
“Non-reportable positions” – small traders who do not have a significant impact on the price.
The material has been provided by InstaForex Company – www.instaforex.com