According to the hourly chart, the GBP/USD pair performed a closing consolidation under the upward trend corridor, which allows us to count on the continuation of the fall in quotes in the direction of the corrective level of 423.6% (1.2432). Yesterday, an attempt to start a fall can be considered unsuccessful, although the Briton fell by about 100 points in total, which is not so little. Today, there is a second attempt to start falling, but it is even weaker than yesterday. In the last few weeks, the British dollar has been growing quite actively, and the ascending corridor clearly explained that the British are not yet ready to fall. Now the British dollar is ready for a fall, but it is just beginning, and bear traders are not yet sure that they should actively sell. The information background could help traders decide. If strong data came from America, then the growth of the dollar was almost guaranteed, but the fact is that there was practically no news from the United States in the first 2.5 days of the week.
Only today, in the next few hours, reports on business activity in the manufacturing sector and the ADP report on changes in the number of people employed in the non-agricultural sector (analogous to Nonfarm Payrolls) will be released. These reports have some chances for traders to work them out, but will they lead to a rise in the dollar? From my point of view, strong growth - not. These data are not of the scale to cause a strong growth of the US currency. Jerome Powell's speeches or a change in the Fed's vector of movement are of much greater importance for the dollar. This vector has not changed in any way in recent weeks, so it is quite reasonable to expect a new growth in the US currency. Total: we have graphical signals for the fall of the euro and the pound, we have an unchanged vector of the Fed, which can lead to new growth of the dollar, and we have unchanged vectors of the Bank of England and the ECB, which will not support their currencies. And there is no other news at our disposal. I would say that the probability of a new fall of the British and European is now high.
On the 4-hour chart, the pair performed a reversal in favor of the US currency after the formation of a "bearish" divergence at the MACD indicator. The reversal occurred near the corrective level of 100.0% (1.2674), but there was no rebound. Thus, the drop in quotes may begin in the direction of the corrective level of 127.2% (1.2250). Consolidation above the Fibo level of 100.0% will increase the probability of resuming the pair's growth in the direction of the 1.2860 level.
Commitments of Traders (COT) Report:
The mood of the "Non-commercial" category of traders has not changed too much over the past week. The number of long contracts in the hands of speculators decreased by 677 units, and the number of short contracts increased by 454. Thus, the general mood of the major players remained the same - "bearish", and the number of long contracts exceeded the number of short contracts by four times, as before. The big players continue to get rid of the pound and their mood has hardly changed over the past week. Thus, I expect that the pound may resume its decline over the next few weeks. Now the corridors on the hourly and 4-hour charts will be of great importance since such a strong discrepancy between the numbers of long and short contracts can also indicate a trend reversal. But there is no point in denying that speculators sell more than they buy.
News calendar for the USA and the UK:
UK - index of business activity in the manufacturing sector (PMI) (08:30 UTC).
US - change in the number of people employed in the non-agricultural sector from ADP (12:15 UTC).
US - index of business activity in the manufacturing sector (PMI) from ISM (14:00 UTC).
On Wednesday in the UK and America, the calendars of economic events do not contain a large amount of important data. But two reports from the United States, which are scheduled for the afternoon, may affect the mood of traders with average strength.
GBP/USD forecast and recommendations to traders:
I recommended selling the pound if the closing is performed under the corridor on the hourly chart. Fixing below the level of 1.2600 will allow you to hold sales with a target of 1.2432. I recommend buying the British if the 4-hour chart closes above the level of 1.2674 with a target of 1.2860.