According to the hourly chart, the GBP/USD pair performed a reversal in favor of the US dollar on Tuesday and a powerful fall toward the level of 1.1883. Within a few hours, the British pound had already seen a reversal and had returned to the 1.2007 level. The pair is currently attempting to regain control of 1.2007. If this occurs, the growth process may continue in the direction of the corrective level of 127.2% (1.2111). The increase in quotes since 1.2007 will help to restart the decline in the direction of 1.1883.
The first aspect of yesterday to consider is the motion in various directions. The British pound fluctuated throughout the day, rising and falling, and at the time of writing, it is only 20 points away from its opening position from the previous day. Trading was therefore highly active yesterday, but neither the dollar nor the pound gained significantly. Although yesterday's information background was quite thin, traders have already started practicing trading during the Friday release of significant numbers. The two wavered, emerged from the side passage, and are now only able to move vertically but in a specific direction.
Another point I'd like to bring up is the FOMC protocol, which may provide some insight into how high US interest rates will eventually be. Numerous economists now anticipate that the likelihood of a sharper tightening of monetary policy will rise to 5.50–5.75% during the coming weeks. This, in my opinion, is what supports the US dollar. The dollar may restart growth if the Fed minutes confirm the "hawkish" assumptions. Everything on Friday will depend on information about the US labor market and unemployment. Bear traders will be helped by strong reports. I'd think there's a good probability the dollar will keep rising this week.
The pair closed under the upward trend corridor and consolidated under the 1.2008 level on the 4-hour chart. Since traders' sentiment is currently turning "bearish," I believe the consolidation of quotes under the upward trend corridor to be the most crucial phase. Now, it is possible to continue the price decline in the direction of the Fibo level of 161.8% (1.1709). Divergences that are maturing are not seen in any indication.
Report on Commitments of Traders (COT):
The sentiment among traders in the "non-commercial" category over the last week has shifted more "bearish" than it did the week before. The number of short contracts increased by 10,585 units, while the number of long contracts held by investors increased by 5,301 units. However, the major players' overall outlook is still "bearish," and there are still more short-term contracts than long-term contracts. However, during the past few months, a significant change has taken place, and presently there is not a significant disparity between the amount of long and short positions held by speculators. There was a threefold change a few months ago. As a result, the pound's chances have greatly improved recently. However, given that the 4-hour chart crossed above the three-month ascending corridor, the British pound may soon continue to decline.
The following is the UK and US news calendar:
United States - ISM manufacturing sector business activity index
United States - FOMC protocol
There are no noteworthy events scheduled for Wednesday in the UK or the US. The background information's impact on today's traders' attitudes will be minimal.
GBP/USD forecast and trading suggestions:
In the event of a new close at the 1.2007 level with a target of 1.1883, I advise selling the pound. When the British pound is locked above the 1.2007 level on the hourly chart, it will be possible to buy it with a target of 1.2111.