GBP/USD 1H

The pound/dollar continues its downward movement as if nothing had happened. Quotes of the pair continue to move strictly inside the descending channel, closer to its bottom line. The bears crossed the support area of 1.2402-1.2422 with relative ease last Friday, so the upward correction did not start, and buyers did not get a chance to take the pair to the upper line of the channel. Thus, in general, the British currency continues a more logical, from our point of view, decline after two weeks of growth. We expect a decrease to the support level of 1.2268 in the next day or two. This level can hold back the gusts of bears for a while and allow the pair to adjust slightly. Although usually, when the pound begins to fall, it is a long and powerful process. In general, buyers now continue to relax and wait for their chances, which will appear no earlier than the release of the pound/dollar pair from the downward channel.

GBP/USD 15M

Both linear regression channels are still directed downward on the 15-minute timeframe, so the pair continues to show its willingness to continue moving down and the absence of signs of a correction.

COT Report

The latest COT report, which covers the dates June 10-16, shows that during this period of time, professional market players were busy closing sales contracts. In other words, the picture during the reporting week was exactly the same as for the euro. Neither the pound or the euro grew in demand during the indicated period, due to which these currencies became more expensive. On the contrary, demand for the dollar decreased, 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 went up very vigorously, and now, as they say, repay debts. It is also worth noting that speculators also closed purchase contracts, hedgers closed both types of contracts during the reporting week, and in general, the pound lost around 32,000 more contracts. Thus, banks, large companies, investment funds and others were engaged in the closing of, rather than the opening of, contracts during the reporting week. Based on this, we believe that the US dollar has excellent chances for further growth.

The fundamental background for the GBP/USD pair continues to be more negative. Brexit and the agreement between Brussels and London regarding the continued coexistence of the bloc and the United Kingdom, when the "transition period" will end, remains the number one topic for the British currency. There is no positive news on this topic. Moreover, we don't even receive any ordinary macroeconomic statistics from the UK. There are no important and interesting messages from Prime Minister Boris Johnson or even the UK Parliament. The United States continues to practically provide the entire fundamental background, however, there is no news on the most interesting topics, such as the China-US confrontation or the Hong Kong issue. Thus, we do not see any reason as to why the British pound can grow this week. It is clear that the dollar will not go up forever just because there is a lull in the UK news. But it would be logical to return to the area from which the not quite justified growth began. Thus, another 150 to 200 points down the pair is almost obliged to go. Well, future prospects will depend on the willingness of traders to invest in the dollar, despite all the problems that the United States have faced in recent weeks and months.

There are two main scenarios as of June 22:

1) The initiative for the pound/dollar pair remains completely in the hands of sellers, since the upward trend line has been overcome. Therefore, short positions with the objectives of the support level of 1.2268, the area of 1.2194-1.2214 and the level of 1.2062, as the support area of 1.2400-1.2420 have also been overcome, are still relevant. Potential Take Profit in this case is from 65 to 275 points.

2) Sellers continue to dominate the market and leave no chance for the bulls. Thus, you are advised to consider purchase orders again but not before you consolidate the quotes of the pair above the downward channel. In this case, the bulls will be able to count on further growth with the goals of the Senkou Span B line and the resistance level of 1.2740. However, in the coming days such a development is not expected. Potential Take Profit in this case is up to 260 points.