On the hourly chart, the GBP/USD pair reversed in favor of the US currency yesterday, dropping to the corrective level of 61.8% (1.2715). The rebound of the pair's rate from this level worked in favor of the British pound, initiating a new uptrend towards the zone of 1.2788–1.2801. If quotes consolidate above this zone, the probability of further growth towards the next corrective level at 76.4% (1.2876) will increase.
The situation with the waves could be clearer. Trends change too often and become shorter. The last "bullish" trend consists of a single wave. The last downward wave barely broke the low of the previous wave. The last upward wave broke the last two peaks but can become a single wave. Currently, waves do not answer the question of the direction of future movement. If the last upward wave turns out not to be a single one, then a new upward wave and even greater growth of the British currency can be expected.
The information background is absent, but traders continue to trade actively. To be more precise, only bulls are actively trading, while bears are sticking to passive positions. Despite the growth of the US dollar yesterday, it may face another decline today. As for the British pound, another upward wave will be formed, while the euro still has both upward trending corridors. There are still no signals for a prolonged decline in the euro and pound.
On the 4-hour chart, the pair has risen to the Fibonacci level of 61.8% (1.2745) and consolidated above. Thus, a reversal in favor of the British currency was executed, and the growth process towards 1.3044 has resumed. The ascending trend corridor still characterizes trader sentiment as "bullish," and there is currently no sign of the end of this trend. There are no emerging divergences at the moment. I will wait for the start of the "bearish" trend no earlier than the closing below the ascending corridor.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category has hardly changed over the past reporting week. The number of long contracts held by speculators has decreased by 3201 units, and the number of short contracts has decreased by 1546. The overall sentiment of large players changed to "bearish" a few months ago, but currently, bulls have the upper hand again. The gap between long and short contracts is increasing in favor of the bulls: 68,000 versus 48,000. I believe excellent prospects for further decline still exist for the British pound. I do not expect a strong rise in the British currency soon. Over time, bulls will continue to get rid of Buy positions, as the long-term information background currently favors the US dollar. The growth we have seen in the last two months is a correction.
Economic Calendar for the US and the UK:
On Friday, the economic events calendar contains a few interesting entries. The impact of the information background on market sentiment will be absent today.
GBP/USD Forecast and Trading Recommendations:
Selling the British pound was possible yesterday after the consolidation below the zone of 1.2788–1.2801 on the hourly chart. The nearest target at 1.2715 has been achieved. Today, sales will be possible on a rebound from the zone of 1.2788 – 1.2801 with the same target. Buying opportunities were possible on a rebound from 1.2715 on the hourly chart with a target of 1.2788–1.2801. If quotes consolidate above this zone, long positions can be kept open with a target of 1.2876.