On Wednesday, the GBP/USD pair consolidated below the level of 1.2007 on the hourly chart. This allows traders to expect further decline towards the level of 1.1883. If the quotes rebound from 1.2007, the pair's chances to drop may increase. If the price fixes above 1.2007, the British currency may resume growing towards the Fibo level of 127.2%, 1.2111. The quotes closed below the ascending trading range, which considerably supports the US dollar's growth.
The information background will be much more interesting in the remaining days of the week. Frankly speaking, the quotes settled below the trading channel and this fact gives a very important signal. Thus, the markets bet on the US currency growth in the remaining days of this week. However, much will depend on what Jerome Powell is going to say tonight as well as on the labor market and unemployment claims reports. For example, the British pound showed gains this morning instead of the more expected decline.
The more hawkish Powell's rhetoric is, and the stronger the labor market and unemployment reports are, the more likely the GBP will decline and the US dollar will rise. At the same time, one of the most negative factors for USD is a slowdown in interest rate hikes by the Fed. Investors have already taken into account this fact, so we can hardly expect a new drop of the US currency. However, the US inflation may start to fall even faster or the Fed chairman may reverse his stance to a more dovish one. The markets do not expect both scenarios and the US dollar is unlikely to drop.
On the 4-hour chart, the upward channel keeps the traders' sentiment bullish. To see a strong fall, the price should fix below it. In this case, the price needs to go down by 300 pips to 1.1709.
On the 4-hour chart, the pair has consolidated below the level of 1.2008, which allows expecting that the decline will continue towards the Fibo level of 161.8%, 1.1709. The bullish divergence is quite weak but the fixation below 1.2008 is not strong as well. Both signals are not strong. However, the trading channel has given a strong signal, so the pair's decline is limited by 1.1709.
COT report
Last week, the sentiment of non-commercial traders became less bearish than the week before. The number of speculators' long contracts decreased by 3,782, and the number of short ones dropped by 674. The sentiment of big players remains bearish, and the number of short contracts is still very much higher than the number of long ones. Thus, big traders continue to remain bearish on the British pound for the most part, and their sentiment has been gradually changing towards bullish in recent months but this process may take a lot of time. It has been going on for several months now, and still, the number of sales is twice as high. The British currency may continue rising because the graphical analysis and the trading range on the 4-hour chart confirm this. The information background makes everything quite ambiguous. The US dollar may be supported by several factors. Nevertheless, now we see the growth in the pair, which was expected for many months. At the same time, there are no solid grounds for it.
US and UK economic calendar:
US - ADP Non-Farm Employment Change (13-15 UTC).
US - Gross Domestic Product (13-30 UTC).
US - Federal Reserve Chairman Jerome Powell Speaks (18-30 UTC).
On Wednesday, the US economic calendar has three important events, and the UK calendar has nothing interesting. The news background may significantly affect the market today.
GBP/USD forecast and recommendations for traders:
One may sell GBP with a target of 1.1735, as the price closed below the uptrend channel. In addition, it would be better to refrain from buying GBP now, as the pair is highly likely to fall.