On the hourly chart, the GBP/USD pair continued its downward trend on Monday towards the support zone of 1.2584–1.2604. It has not reached this zone, and as of Tuesday morning, it is showing a slight increase. However, I expect a resumption of the decline of the British pound today. A rebound of quotes from the levels of 1.2584 or 1.2604 will favor the pound and some growth towards the Fibonacci level of 61.8%–1.2715. Consolidation of the pair's rate below the zone will increase the probability of further decline towards the level of 1.2513.
The wave situation became more complex last week. Speeches by Bailey and Powell triggered a strong rise in the British pound, and the recent upward wave surpassed the peaks and lows of the previous five waves. Thus, the trend has shifted to "bullish," but the current chart allows for a decline of 130-150 points, and the "bullish" trend will not be disrupted as long as the low from December 13 is not breached. Therefore, we can only confirm the completion of the "bullish" trend with a new upward wave that does not surpass the peak of the previous wave (from December 15).
On Monday, there was a lack of significant news. I mean the kind of news that directly influences traders' sentiments. However, there was a speech by Ben Broadbent, a member of the MPC of the Bank of England. Broadbent stated that wage growth rates remain high, and it will take a long time for them to decrease to target values. According to him, the MPC cannot currently count on a downward trend in wage inflation. The risks of maintaining the current growth rates are high, and high wage inflation, especially in the service sector, will impede the slowdown of overall and core inflation.
Thus, wage inflation remains a significant challenge for the Bank of England. It cannot transition to a softer MPC, as inflation may stall or resume growth. The British regulator will have to maintain a "hawkish" stance for some time, as stated by Andrew Bailey last week. I do not believe that the persistence of the "hawkish" stance will support bullish traders for a long time since the new tightening of the MPC is unlikely.
On the 4-hour chart, the pair consolidated below the corrective level of 61.8% (1.2745). Thus, quotes remain within the ascending trend corridor, and a rebound from its upper line and the level of 1.2745 suggests a decline toward the lower line. I will expect a significant decline in the pound only after consolidating below the ascending trend corridor. There are no imminent divergences observed in any of the indicators today. A rebound of quotes from the lower line of the ascending corridor will maintain the current "bullish" trend.
GBP/USD forecast and trader recommendations:
Sales of the pound could have been opened on the rebound from the zone of 1.2788–1.2801 and on the close below the level of 1.2715. Currently, these transactions can be kept open with a target of 1.2604. Today, there will be no significant news in the UK, and in the US – only reports on new home construction volumes and the number of permits issued for new construction. In my opinion, these are not the most important data that will not impact traders' sentiments. Purchases will be possible on a rebound from the zone of 1.2584–1.2604 on the hourly chart with a target of 1.2715.