GBP/USD. March 4. COT report. Traders reacted very calmly to the speech of the British Finance Minister Rishi Sunak
GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair increased to the corrective level of 38.2% (1.3980) yesterday and knocked on the closed door all day. It was not possible to close over this level. As a result, a reversal was made in favor of the US currency and the quotes began to fall in the direction of the Fibo level of 50.0% (1.3900). However, bull traders still managed to close above the downward trend corridor, so the probability of further growth of the British dollar increases. You only need to close above 1.3980. Meanwhile, traders took all the information that Rishi Sunak gave them very calmly, who spoke yesterday in the British parliament with a draft budget for the next financial year. The Finance Minister assured that the government will continue to support businesses and citizens who are in a difficult situation due to the crisis and the pandemic.
Sunak also said that another 1.6 billion pounds will be allocated for the vaccination procedure. Also, all theaters, museums, and amateur teams of all sports will receive assistance from the state. But more interesting to traders was the speech of Silvana Tenreyro, a member of the monetary committee of the Bank of England, who said yesterday that there is no evidence that negative rates will make the British economy weaker. Tenreyro has previously said that a rate cut below zero, judging by the eurozone, indicates that this is a viable path to accelerate economic growth and inflation. Thus, the Bank of England is still beating around the bush about negative rates, not daring to introduce them. And the British pound continues to beat around the bush around its highs, finding no new reasons for growth.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair increased to the corrective level of 161.8% (1.3979) and a new rebound from it. Thus, the fall in quotes can now be continued in the direction of the level of 1.3850 and the ascending trend line, which continues to characterize the current mood of traders as “bullish”. The consolidation of quotes above the level of 1.3979 will increase the chances of continuing growth towards the next level of 1.4126.
GBP/USD – Daily.
On the daily chart, the pair’s quotes closed under the Fibo level of 127.2% (1.4084), which now allows us to count on a slight drop in quotes. However, more important now are the data from the hourly and 4-hour charts.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair completed a close over the second downward trend line. Thus, the chances of long-term growth of the pound are significantly increased.
Overview of fundamentals:
On Wednesday, there were several reports in the UK and the US that could arouse interest among traders, however, data on business activity and changes in the number of employees did not interest them.
News calendar for the United States and the United Kingdom:
UK- construction PMI index (09:30 GMT).
US – number of initial and repeated applications for unemployment benefits (13:30 GMT).
US – Federal Reserve Board of Governors Chairman Jerome Powell will deliver a speech (17:05 GMT).
On March 4, only PMI for the construction sector will be published in the UK, and in the US – an important speech by Jerome Powell.
COT (Commitments of Traders) report:
The latest COT report from February 23 on the British pound was extremely eloquent. During the last reporting week, speculators opened 7,243 new long contracts and closed almost 2 thousand short contracts. Thus, their mood has become sharply more “bullish”, which fully coincides with what is happening in the market for the pound/dollar pair. Only in the following days (which were not included in the report) did the fall of the British pound begin, so the next COT report will be interesting. So far, the overall picture remains in favor of the British, as the category of “Non-commercial” traders continues to increase long contracts.
GBP/USD forecast and recommendations for traders:
It is recommended to buy the British dollar on Thursday in the event of a close above the level of 1.3980 on the hourly chart with a target of 23.6% (1.4079). It is not recommended to sell the pound today, as potential signals on the hourly and 4-hour charts have already been missed (rebounds from important levels).
“Non-commercial” – major market players: banks, hedge funds, investment funds, private, large investors.
“Commercial” – commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support 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