On Tuesday, the GBP/USD pair fell to the correction level of 127.2%, 1.2112, rebounded from it, and started to grow towards 1.2238 on the hourly chart. Bull managed to prevent the price from falling and will try to build an uptrend this week. However, if the price settles below 1.2112, the US dollar will be strengthened and the pair may fall towards 1.2007.
Yesterday, Fed chairman Jerome Powell held a speech at the Swedish Central Bank Symposium in Stockholm. He mentioned monetary policy and economic issues only slightly. Powell reported that the Fed had very limited influence on climate risks and cannot become a "climate policymaker." "Without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals," Powell reported. Despite the independence of the Fed, the US Congress wants the regulator to maintain a strong labor market and price stability in the economy. Those are the two main goals of the Fed, Powell said. "Taking on new goals, however worthy, without a clear statutory mandate would undermine the case for our independence," the Fed chairman said.
On the 4-hour chart, the pair closed below the ascending channel. This is a very important moment as it changed the traders' sentiment to bearish. The pair may continue to fall towards the Fibo level of 161.8% - 1.1709. After the bullish divergence, the British pound is growing. The pair's rebound from the correctional level of 127.2% at 1.2250 may work in favor of the US dollar and the pair may start falling again. If the price closes above 1.2250, the pound/dollar pair may continue to grow towards the next correctional level of 100.0% - 1.2674.
COT report:
The sentiment of non-commercial traders has become more bearish over the past week than it was the week before. The number of long contracts owned by speculators grew by 3,040, and the number of short contracts increased by 12,454. The sentiment of big players remains bearish, and the number of short contracts still exceeds the number of long ones. For the last few months, the situation has changed dramatically, and now the difference between the number of speculators' longs and shorts is not too high about 20,000. Only a few months ago, the difference was threefold. Therefore, the prospects for the British pound have greatly improved recently. However, in the near future, the British currency may resume falling down as the price has moved below the three-month ascending channel on the 4-hour chart.
US and UK economic calendars:
The UK and US economic calendars are empty on Wednesday. There will be no influence of information background on the market today.
GBP/USD forecast and recommendations for traders:
One may sell GBP is possible if the price closes below 1.2112 with a target of 1.2007. It is also possible to sell on a rebound from 1.2238 with the target of 1.2112. You may buy GBP if it rebounds from 1.2112 with the target of 1.2238 on the hourly chart.