GBP/USD. July 2. COT report. The negative from the US outweighs the negative from the UK

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GBP/USD – 1H.

Hello, traders! According to the hourly chart, the pound/dollar pair performed a consolidation over the downward trend corridor, so the current mood of traders changed to “bullish”. The growth process may continue in the near future, however, I doubt that it has any information background. The problem is that the UK continues to receive a stream of mostly negative news. The country’s Prime Minister, Boris Johnson, is trying his best to instill optimism in the markets, however, he is not doing it well. There are no real and concrete actions from his government that could have a beneficial impact on the economy. However, all is not well in America now, and the problems are similar. Yesterday’s Fed minutes provided no new food for thought. The US authorities are trying to agree on a new package of assistance to the economy, but if the virus does not stop spreading, it may not be the last package. So the pound has been rising in recent days, however, I don’t believe this currency has a long-term basis for growth.

GBP/USD – 4H.

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On the 4-hour chart, the pound/dollar pair continues to grow in the direction of the corrective level of 38.2% (1.2530). However, on July 2, a bearish divergence is brewing in the MACD indicator, which allows traders to count on a reversal in favor of the US currency and a resumption of the fall towards the levels of 1.2358 and 1.2250. The rebound of the pair’s exchange rate from the corrective level of 38.2% will similarly work in favor of the US dollar and the beginning of a fall in quotes. Fixing above the Fibo level of 38.2% will increase the probability of further growth in the direction of the corrective level of 23.6% (1.2637).

GBP/USD – Daily.

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On the daily chart, the pair’s quotes returned to the corrective level of 50.0% (1.2462). The process of falling can be resumed in the direction of the Fibo level of 38.2% (1.2215) only in the case of a rebound from 1.2462.

GBP/USD – Weekly.

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On the weekly chart, the pound/dollar pair performed a false breakdown of the lower trend line and rebound from it. Thus, until the pair’s quotes are fixed under this line, there is a high probability of growth in the direction of two downward trend lines.

Overview of fundamentals:

On Wednesday, the UK released the index of business activity in the manufacturing sector, which was more than 50. However, the index of business activity in the US production turned out to be no worse. Only the ADP report was disappointing.

News calendar for the US and UK:

US – unemployment rate (12:00 GMT).

US – change in the number of people employed in the non-agricultural sector (12:30 GMT).

US – change in average hourly earnings (12:30 GMT).

US – number of initial applications for unemployment benefits (12:30 GMT).

On July 2, the most interesting events and reports are back in America. The most important of which is the Nonfarm Payrolls. If it is weak, the British dollar may continue to strengthen against the dollar today.

COT (Commitments of Traders) report:

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The latest COT report for the British pound was even less interesting than the euro report. Major market players trading the British pound were even less active during the reporting week. In total, the Non-commercial group opened only 3,500 new contracts. A more or less normal value is the number of 10,000 or more contracts. Thus, globally, the mood of major market players has not changed at all. In the last 10 days, as in the case of the euro, the British pound first fell, then rose, then fell again. The Non-commercial group was even less active, opening 2,500 new short contracts and closing 343 long ones. Well, the general changes for all groups of traders are completely depressing. Thus, the overall conclusion is disappointing. No special changes in the mood of major market players during the reporting week can be noted.

Forecast for GBP/USD and recommendations to traders:

I recommend selling the pound today with the goals of 1.2444 and 1.2358, if the closing rebound from the Fibo level of 38.2% (1.2530) is performed, especially in combination with bearish divergence. New purchases of the pair can be considered with the goal of 1.2637, if the pair performs a consolidation above the level of 1.2530.

Terms:

“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