GBP/USD 1H
Everything said about the euro/dollar pair applies to the pound/dollar. After the pair's quotes left the limits of the descending channel, there were great doubts about the ability of its further movement down. However, the growth of quotes did not last long after this release. At the moment, the GBP/USD pair has fallen to the support area of 1.2403-1.2423 and will now again try to overcome it. And if it succeeds, this will mean that the bears returned to the market after only one or two days of absence, and the exit from the downward channel was a mere coincidence. At the moment, the pair has already crossed the critical Kijun-sen line, which is a relatively strong signal for new sales. Indeed, the dead cross sell signal remains in force on the 4-hour timeframe. Therefore, in the end, we can say the following: buyers did not find new reasons for buying the pound, but at the same time managed to adjust the pair quite strongly, which misled the formation of a new upward trend.
GBP/USD 15M
The lower channel turned down on the 15-minute timeframe, which is the first sign of a possible change in trend. Thus, further downward movement has high chances, the main thing is for bears to overcome the level of 1.2403.
COT Report
The latest COT report, which covers the dates June 10-16, shows that during this time period, professional market players were busy closing sales contracts. The picture for the reporting week was observed exactly the same as for the euro. Demand increased during the indicated period, but not because the pound or the euro became more expensive. On the contrary, demand for the dollar decreased, and traders closed Sell contracts, which led to the growth of European currencies. This is precisely what we told traders to focus their attention on earlier, since there were simply no special reasons to buy the euro and the pound in recent weeks. Nevertheless, both currencies rose. It is also worth noting that, during the reporting week, speculators also closed purchase contracts, hedgers closed both types of contracts, in general, the pound lost about 32,000 more contracts. Thus, banks, large companies, investment funds and others were engaged in closing all types of transactions during the reporting week, rather than opening contracts. However, the the pair is showing its desire to move up again this week. The new COT report, which will be released on Friday, will show if demand for the pound has grown this time among professional traders.
The fundamental background for the GBP/USD pair did not change at all on Wednesday. No new data has been received from the UK or the US on the most pressing topics. Thus, traders returning to selling the pair may be due to the same reasons as the two previous rounds of the downward movement. These reasons are simple and look like this. Despite all the problems that are now overseas, of a political, economic and social nature, the UK still has a thundercloud called Brexit, which continues to "water" it. Therefore, the British economy continues to be "in the rain" for four years and can not begin to dry out. The coronavirus crisis not only affects the American economy, but also finishes the British. Therefore, we have repeatedly said that in the euro's case it is still possible to find logical explanations for strengthening the single currency, but the pound's case looks very strange. It seems that this will not allow the British currency to start a new growth. Although today, macroeconomic statistics from across the ocean can help buyers, since GDP and durable goods orders can disappoint.
There are two main scenarios as of June 25:
1) The initiative for the pound/dollar pair passed into the hands of buyers, but they do not want to take the opportunity. Therefore, it will be possible to resume downward trading after overcoming the support area of 1.2403-1.2423, which can happen in the next few hours. The target in this case will be the support level of 1.2229. Potential Take Profit in this case will be about 150 points.
2) But now, buyers again need to wait for a fix above the Kijun-sen line, which will give them a chance to resume moving up with targets at the resistance level 1.2573 - Senkou Span B line (1.2606) - resistance area 1.2719 - 1.2759 - resistance level is 1.2801. Overcoming each target will allow traders to stay in longs. Potential Take Profit in this case will be from 120 to 350 points.
