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05.08.202412:53 Forex Analysis & Reviews: Forecast of GBP/USD pair on August 5, 2024

On the hourly chart, the GBP/USD pair rebounded from the 1.2705 level on Friday, turning in favor of the pound and rising to the upper line of the downward trend channel. The channel had to be slightly adjusted, but it continues to characterize the current mood of traders as "bearish." This morning, the quotes fell to Friday's low. A new rebound from the 1.2705 level will allow for some growth, but there is some nervousness in the market from early on. Movements during the day can be sharp.

Exchange Rates 05.08.2024 analysis

The situation with the waves has changed a bit. The last completed upward wave (which started forming on July 2) managed to break the low of the previous upward wave, and the latest downward wave failed to break the low of the previous wave. Thus, we are currently dealing with a "bullish" trend and a deep corrective wave or series of waves. Growth of the pound may resume, but now traders are forming a corrective wave downward. There is no indication yet of a trend change to "bearish" from a wave perspective. For this, the pair needs to break the last low from July 2. However, the waves are now very long, and in recent weeks the pound has only been falling. Locally, the trend is "bearish."

The information background on Friday also did not allow the bears to continue attacking. However, I want to remind you that on Thursday, the Bank of England decided to start easing monetary policy. Thus, in the coming weeks, the pound may continue to fall due to this news factor. As we see, the dollar's fall due to the poor labor market and unemployment statistics in the US was short-lived. Without any apparent reasons, by Monday morning, the pound plunged lower. I believe that the local "bearish" trend persists and will continue this week. Traders are now paying more attention to monetary policy, and the data on the labor market and unemployment in the US have not been pleasing for several months in a row. Traders have reacted to this news; now we can return to the main trend.

Exchange Rates 05.08.2024 analysis

On the 4-hour chart, the pair rebounded from the 1.3044 level, forming a "bearish" divergence at the RSI indicator. A little earlier, the same indicator entered the overbought zone. Thus, several signals for selling on the senior chart were received. After consolidating below the 61.8% corrective level at 1.2745, the falling process can be continued towards the 1.2620 level. A rebound from this level will allow for some growth.

Commitments of Traders (COT) Report:

Exchange Rates 05.08.2024 analysis

In my view, the prospects for a fall in the pound remain, but the COT reports say otherwise. Over the last 3 months, the number of long positions increased from 98 thousand to 165 thousand, while the number of short positions remained unchanged at 54 thousand. I believe that over time, professional players will again begin to dispose of long positions or increase short positions, as all possible factors for buying the British pound have already been played out. However, it should not be forgotten that this is just an assumption. Graphic analysis indicates a very likely fall in the near future, but this does not mean that the fall will last several months or half a year.

News Calendar for the USA and UK:

  • UK – Business Activity Index in the services sector (08:30 UTC).
  • USA – Business Activity Index in the services sector (13:45 UTC).
  • USA – ISM Business Activity Index in the services sector (14:00 UTC).

Monday's economic event calendar contains several important entries. The impact of the informational background on market sentiment today is of medium strength.

GBP/USD Forecast and Tips for Traders:

The market started the new week very nervously; I do not yet see clear signals. Movements are strong, and it's quite difficult to respond in time. A rebound from the 1.2705 level can be used for purchases, but trading today should be done cautiously.

Fibonacci levels are constructed from 1.2892 to 1.2298 on the hourly chart and from 1.4248 to 1.0404 on the 4-hour chart.

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

Samir Klishi,
Analytical expert of InstaSpot
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