On the H1 chart, the GBP/USD pair made an attempt to continue the downward movement but a rebound from the Fibo level of 38.2% at 1.3507 provoked a rise in the quote. Closing above the Fibonacci retracement level of 50.0% at 1.3552 implies further growth towards the next Fibo level of 61.8% at 1.3599. At the moment, it is difficult to forecast the trajectory of the pair in the coming weeks. As we can see, traders' activity has been very low lately. The chances that the market will recover this week are very slim. The information background was quiet in the first three days of the week. On Thursday and Friday, investors will be waiting for economic reports from the UK and the US. We assume that inflation in the US will not change much and is unlikely to move the market. The same is true for the UK where the manufacturing activity and GDP growth will be published.
At first sight, this data looks like a definite market catalyst. However, reports on industrial production have long been ignored by the market. The interim GDP report will reveal growth for the previous month. I think that traders' reaction to this report will be minor or close to zero. Therefore, trading may remain slow for the entire week. Meanwhile, investors could take notice of the political situation in the UK. Several Conservative MPs are ready to hold a vote of no confidence in Boris Johnson, and about 20 more votes are needed to launch the process. If the issue is put to a vote, Johnson is likely to resign, as all Labor members will vote against him. Now, Boris Johnson's fate is in the hands of his fellow MPs.
On the H4 time frame, the pair consolidated above the Fibonacci retracement level of 50.0% at 1.3457. Yet, the first attempt of the bulls to reach the Fibo level of 38.2% was unsuccessful. The quotes were gradually sliding towards 1.3457 and have now settled between 1.3457 and 1.3642. So, I recommend considering the 1-hour chart as it has more levels and, therefore, more trading signals.
The COT report
The sentiment of the non-commercial group of traders has changed dramatically over the reporting week. This week, traders opened 8,876 short contracts and closed 6,419 long contracts. Last week, the total number of long and short positions of the non-commercial category of traders was almost equal. This time, the difference is obvious: 52484 – 31637. This clearly indicates the bear market which comes in line with the current situation on the daily chart. The sentiment of major market players has been changing quite often recently which is seen in the first two columns of the table. So let us wait with conclusions for the long-term.
Economic calendar for UK and US
The economic calendar for Wednesday looks mostly uneventful both in the UK and the US. Therefore, the fundamental background may not have any effect on the market today.
Outlook for GBP/USD and trading tips
I recommend selling the pound as soon as the price closes below the level of 1.3507 on the H1 chart with the next target at 1.3449. Buying the pair will become relevant in case the quote settles below 1.3552 on H1 with the target at 1.3599. Since the news background is quiet today, the pair may stay in the narrow rage.