08.07.202002:33 Forex Analysis & Reviews: Hot forecast and trading signals for the GBP/USD pair on July 8. COT report. Buyers taking advantage of the opportunities and a depressing fundamental background from Britain

GBP/USD 1H

The GBP/USD currency pair, in contrast to EUR/USD, was trading higher on Tuesday, traders managed to reach the resistance level of 1.2589, and also overcome the level of 1.2530, from which the quotes rebounded three times earlier. At the moment, the pound/dollar pair is being corrected, but a new upward trend is emerging. Since there are no trend lines or ascending channel at the moment, visually buyers may not have a clear advantage in the market. However, they are now supported by the Kijun-sen line, we do not expect the pair to be below it in the coming days. Despite the fact that the fundamental background from Britain is not too favorable, the pound continues to be in demand against the US dollar.

GBP/USD 15M

Both linear regression channels continue to be directed upwards on a 15-minute timeframe, so the overall trend remains upward in the short term. There are no signs of the beginning of correction at the moment.

The COT report

The latest COT report, which covers the dates of June 24-30, shows that major traders actively traded the pound at this time. If the major market participants mainly reduced contracts for the euro, they increased contracts for the pound. Professional market participants increased the number of contracts for purchase by 4,000,and 8,400 for sale. Thus, the net position decreased by 4,400 contracts only in the non-commercial category. It is logical for the pound to become cheaper during this period of time. The commercial group, which does not set goals to make a profit through currency operations, naturally bought the pound to a greater extent. Since if someone sells currency, then who buys it. The total net position for the pound increased during the reporting week (18,000-15,000 = +3,000). The pound sterling grew after the report expired, so we can assume that professional market participants are already looking in the direction of buying the British currency.

The fundamental background for the GBP/USD pair was completely absent on Tuesday. From time to time, news is received regarding negotiations between London and Brussels on a free trade agreement, but they are not being promoted. It's just that there are constant reports that a new round of negotiations has begun, a new round of talks has ended, British Prime Minister Boris Johnson is personally going to negotiate, the meeting with EU leaders has been rescheduled, and that's all, no progress. Thus, we cannot conclude that the pound began to strengthen on Tuesday on the basis of some optimism regarding this topic. Most likely, the pound resumed growth on the basis of technical reasons, successfully breaking the level of 1.2530, which hindered buyers from going up before that. Nothing is changing for the better in the United States, therefore, the high risk of a new quarantine or just a serious blow to the economy as a result of the coronavirus outbreak may force investors to turn their backs on the dollar. Industrial production can continue to work and recover, but ordinary Americans cannot be forced to show economic activity at the level as if everything was fine. Thus, while a new outbreak of COVID-2019 is raging in the country, the US currency may continue to remain under pressure.

There are two main scenarios as of July 8:

1) The upward movement has more prospects now since the resistance level of 1.2530 was passed. Thus, we recommend buying the pair while aiming for the resistance level of 1.2698, if the bears do not lose the initiative in the near future and do not fall below the Kijun-sen line. For more confidence, we recommend waiting until the first target of 1.2589 is reached. The potential Take Profit in this case will be about 100 points.

2) Sellers are advised to wait until the pair consolidates below the support area of 1.2404-1.2424, and at the same time, the Kijun-sen and Senkou Span B lines. In this case, the downward trend will again take place, and the first targets for sell orders will be 1.2311 and the support area of 1.2196–1.2216. Potential Take Profit in this case will be from 70 to 170 points.