On the hourly chart, the GBP/USD pair on Tuesday fixed above the corrective level of 23.6% (1.2720), but the bulls could not hold their positions for a long time. Just a few hours later, the pair closed already below this level, but the graphical picture did not change from this. The last wave up broke the peak of the previous ascending wave. Thus, a new "bullish" trend is emerging for us. It is hard to say how long it will be, but, in my opinion, there are several "bullish" signals at once:
The pair performed a closure above the downward trend corridor.Two waves have already been built up in a row with peak updates.Each low is higher than the previous one.Thus, the chances of the British currency's growth are quite large.
There was no news background yesterday, and today traders may only pay attention to the FOMC protocol. Recall that the Fed decided to take a break in June after 15 months of tightening monetary policy. The discussions at the meeting are undoubtedly interesting but have no practical value. The market was confident that the rate would not rise in June. It also clearly understands that the rate will be increased again by 0.25% in July.
The current US economic statistics fully allow the Fed to continue tightening. GDP in the first quarter was 2.0%, and this week's labor market and unemployment reports may show strong values again. Even if the reports are weaker than traders' expectations, the Fed will unlikely refuse to raise it in July. Thus, the dollar already has a "bullish" factor, but pound bulls dominate the market. The FOMC protocol is unlikely to add confidence to dollar buyers, as there is nowhere to strengthen the "hawkish" rhetoric.
On the 4-hour chart, the pair reversed in favor of the American after forming a new "bearish" divergence at the CCI indicator, but there was no consolidation below the 1.2674 level. Thus, the falling process may continue, but only after closing below 1.2674. The hourly chart gives a more eloquent and informative picture; I advise you to pay more attention to it. This week, a new "bullish" trend is emerging, largely depending on American statistics.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" category of traders has become more "bullish" over the past reporting week. The number of long contracts held by speculators increased by 2815 units, while the number of short ones decreased by 2571. The overall mood of major players remains fully "bullish," and a twofold gap has formed between the number of long and short contracts: 104 thousand versus 52 thousand. The British currency has good prospects for continued growth, and the news background now supports it more than the dollar. However, I do not expect a strong rise in the pound sterling soon, as the market has already factored in the Bank of England's interest rate hike to 0.50%. There are also a few graphic signals for purchases.
News calendar for the USA and the UK:
UK - Services PMI (08:30 UTC).
USA - FOMC Meeting Minutes (18:00 UTC).
Wednesday's economic events calendar contains only two entries. The FOMC minutes will be more interesting, but its content may be neutral and well-known. The influence of the news background on traders' sentiment for the rest of the day may be weak.
GBP/USD forecast and advice for traders:
You can open new sales of the British currency in case of a bounce on the 4-hour chart from the 1.2745 level with targets of 1.2690 and 1.2640. Consider buying the pair upon a clear and confident close above the 1.2720 level on the hourly chart with targets in the 1.2750-1.2800 area.