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20.11.202416:43 Forex Analysis & Reviews: Forecast for GBP/USD on November 20, 2024

On the hourly chart, the GBP/USD pair rebounded from the support zone of 1.2611–1.2620 on Tuesday and climbed to the level of 1.2709. The subsequent rebound from 1.2709 favored the U.S. dollar, pushing the pair downward toward the 1.2611–1.2620 zone. This indicates a sideways trend, with the British pound moving consistently within it.

Exchange Rates 20.11.2024 analysis

The wave structure raises no concerns. The last completed upward wave failed to surpass the previous peak, while the ongoing downward wave has broken the last two lows. Thus, the bearish trend remains intact. To signal its potential end, the pair would need to return to the 1.3000 level and close above the most recent peak.

On Tuesday, there was minimal news background for both the British pound and the U.S. dollar. This morning, UK inflation reports were released, which bulls had placed high hopes on. However, these hopes quickly diminished—not because of the reports themselves. UK inflation rose to 2.3%, surpassing expectations of 2.2%, while core inflation climbed to 3.3% compared to the anticipated decline to 3.1%. These reports confirm Andrew Bailey's concerns about rising inflation in the near future. While rising inflation suggests the Bank of England is unlikely to adopt aggressive monetary easing policies at every meeting, it also indicates that rate cuts will likely occur at a slower pace. At first glance, this seems favorable for the pound. However, I have previously noted that favorable news alone is insufficient. Bulls require the motivation to act, and the news serves only as a supportive factor. Today's trading activity (at the time of writing) shows little to no bullish momentum, or perhaps a complete absence of bullish participants in the market. Even the positive inflation data has only led to further declines in the pound.

Exchange Rates 20.11.2024 analysis

On the 4-hour chart, the pair has declined to the 1.2620 level. A rebound from this level and subsequent rise seems unlikely. If the pair closes below the 1.2620 level, it would increase the probability of further declines toward the 76.4% Fibonacci retracement level at 1.2565. Bullish divergences, which have appeared regularly, are currently irrelevant to traders.

Commitments of Traders (COT) Report:

Exchange Rates 20.11.2024 analysis

According to the Commitments of Traders (COT) data, sentiment among "Non-commercial" traders turned more bullish during the last reporting week. The number of long positions held by speculators decreased by 745, while the number of short positions saw a significant drop of 11,711. Despite this, bulls still hold a substantial advantage, with 120,000 long positions compared to 64,000 short positions.

In my view, the pound remains poised for further declines, as even the COT data points to strengthening bearish sentiment. Over the past three months, the number of long positions has risen from 102,000 to 120,000, while short positions have increased from 55,000 to 64,000. I believe professional traders will likely continue reducing long positions or increasing short positions, as most factors supporting the pound have already been priced in. Technical analysis also aligns with this bearish outlook.

News Calendar for the USA and the UK:

  • UK – Consumer Price Index (07:00 UTC)
  • USA – Building Permits (13:30 UTC)
  • USA – New Home Sales (13:30 UTC)

On Wednesday, the economic calendar contains only one already-released UK report. The impact of the news background on trader sentiment for the rest of the day is expected to be moderate.

GBP/USD Forecast and Trading Tips:

Selling the pair was possible after a rebound on the 4-hour chart from the 1.3044 level, targeting 1.2931. This target was achieved twice. Subsequent targets at 1.2931, 1.2892, 1.2788–1.2801, 1.2752, and 1.2611–1.2620 have also been reached. A close below the 1.2611–1.2620 zone would allow traders to maintain sell positions with further targets at 1.2570 and 1.2517. The pair can also be sold after a rebound from the 1.2709–1.2434 zone. Given the current bearish trend, buying the pair is not recommended.

Fibonacci levels are drawn from 1.3000 to 1.3432 on the hourly chart and from 1.2299 to 1.3432 on the 4-hour chart.

*Analiza tržišta koja se ovde nalazi namenjena je boljem razumevanju tržišta i ne pruža instrukcije za vršenje trgovanja.

Samir Klishi,
Analytical expert of InstaSpot
© 2007-2024
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