On the hourly chart, the GBP/USD pair has risen to the corrective level of 61.8% (1.2715). A rebound from this level allows traders to expect a reversal in favor of the US dollar and a drop into the support zone of 1.2584–1.2611. If the pair remains above the level of 1.2715, the probability of further growth towards the resistance zone of 1.2788–1.2801 increases.
The wave situation remains ambiguous. I mentioned earlier that the trends are relatively short-term, and we often see single waves, which constitute a complete trend. The bullish sentiment persists due to the absence of a decline in the British pound. However, the waves need to clarify what is happening in the market. The last upward wave broke through previous peaks, but the new downward wave cannot overcome the level of 1.2611, around which two previous lows are located. Thus, there is no reason to consider the bullish trend completed yet.
The information background on Thursday supported both the pound and the dollar. However, it's time to forget that because today is a very important day for traders and the US currency. In the second half of the day in America, the Nonfarm Payrolls report will be released, which can either greatly help the dollar or push it lower. Forecasts suggest the creation of 150–170 thousand new jobs in December. This is a low figure, but, on the other hand, it should be relatively easy to exceed. The unemployment rate may rise to 3.8–3.9%, but unemployment is less important for traders than payrolls.
The ISM Business Activity Index for the services sector promises to maintain its November value at 52.7. I would say that today, the dollar has a good chance of returning to the zone of 1.2584–1.2611.
On the 4-hour chart, the pair has reversed in favor of the US dollar, breaking below the rising trend channel and falling to 1.2620. Thus, a graphical picture has now formed, allowing for the completion of the bullish trend. Now, bears need to consolidate below the level of 1.2620 to anticipate further decline of the British pound towards 1.2450. There are no imminent divergences observed in any of the indicators today.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category changed in favor of the bears over the past reporting week. The number of long contracts held by speculators decreased by 10,060 units, while the number of short contracts decreased by 4,226. The overall sentiment of major players shifted to "bearish" a few months ago, but bulls currently have a slight advantage. There is a gap between the number of long and short contracts: 59,000 versus 45,000, but the gap is small and not increasing.
There are excellent prospects for the continuation of the British pound's decline. I do not expect a significant rise in the pound. Over time, bulls will continue to get rid of their buy positions, as all possible factors for buying the British pound have already been exhausted. The recent rise we have seen in the last three months is a correction.
Economic Calendar for the US and the UK:
UK - Construction Business Activity Index (09:30 UTC).
US - Nonfarm Payrolls Change (13:30 UTC).
US - Unemployment Rate (13:30 UTC).
US - Average Hourly Earnings Change (13:30 UTC).
US - ISM Services Business Activity Index (15:00 UTC).
Friday's economic calendar contains several important entries. The main action is expected in the second half of the day. The impact of the information background on today's market sentiment can be significant.
Forecast for GBP/USD and Trader Recommendations:
Selling the pound was possible yesterday after the rebound from the level of 1.2715 with a target of 1.2611. These trades can still be held open. Buying opportunities may arise today if there is a rebound from the level of 1.2611 on the hourly chart, with a target of 1.2715. A close above 1.2715 will also allow opening buy positions with a target of 1.2788.