On the hourly chart, the GBP/USD pair showed significant growth on Tuesday and Wednesday; by yesterday's end, it had reached the Fibonacci level of 76.4% (1.2720). A rebound of quotes from this level will benefit the US currency and the resumption of the decline towards the corrective level of 100.0% (1.2590). A new consolidation above the 1.2720 level will increase the probability of growth continuing towards the next Fibonacci level of 61.8% (1.2801).
The pound surged sharply, but it wasn't unexpected. On Tuesday, US economic data disappointed, and it disappointed again on Wednesday. The most significant disappointment was related to something other than the ADP reports or job openings but to the GDP. US economic growth in the second quarter was revised to 2.1% from 2.4%. This figure is still higher than the previous quarter; however, traders were let down, which caused the fall of the US dollar. Still, I strongly doubt that the pound's growth, which doesn't have a single "domestic" report this week, will continue. The pound still has very weak informational support. Right now, it's rising solely due to unsatisfactory data from America.
The waves over the past few days have changed the graphical picture. There's now a "bullish" trend, indicated by the last three waves. The current trend must be disrupted to foresee a new "bearish" trend. However, doing that will be challenging. A new wave down should breach the low of the day before yesterday, which stands at 1.2562. By the time it's breached, most of the decline will already be behind, making it difficult to benefit from it. There's also a simpler option: the next upward wave shouldn't surpass yesterday's peak. One of the two must occur, and today and tomorrow, the information backdrop in the US will be very strong.
On the 4-hour chart, the pair returned to the 1.2745 level and consolidated above the descending trend corridor. A rebound from this level will favor the US currency and the resumption of a decline towards the 1.2620 level. A "bearish" divergence has formed on the CCI indicator, which increases the chances of a rebound from 1.2745. The likelihood of a new decline in the pair is higher than that of a rise. The pair's rate consolidation will confirm an exit from the descending corridor and increase the chances of growth continuing toward 1.2846.
Commitments of Traders (COT) report:
The sentiment of the "Non-commercial" trader category has become more "bullish" over the last reporting week. The number of long contracts held by speculators increased by 7,520 units, while the number of short contracts decreased by 599. The overall sentiment of the major players remains "bullish," with a more than two-fold gap between the number of long and short contracts: 98,000 versus 39,000. The pound had good prospects for continued growth a few weeks ago, but many factors have favored the US dollar. Anticipating a new strong rise in the pound is very challenging. Nevertheless, the bulls are in no hurry to get rid of buy positions, expecting the pound to show growth.
News calendar for the US and UK:
US - Core Personal Consumption Expenditures Price Index (12:30 UTC).
US - Initial Unemployment Claims (12:30 UTC).
US - Personal Income and Expenditures (12:30 UTC).
On Thursday, the economic events calendar contains three entries from the US. For the rest of the day, the influence of the informational background on the market sentiment may be moderate in strength.
GBP/USD forecast and trading advice:
Selling the pound is possible upon a rebound from the 1.2745 level on the 4-hour chart with a target of 1.2590. I consider only one signal possible for purchases – consolidation above 1.2745. The target is 1.2846.