On the hourly chart, the GBP/USD pair on Friday confirmed below the important level of 1.2517 and fell to the Fibonacci level of 38.2%-1.2453. Fixing quotes below this level will favor the continuation of the British pound's decline towards the next level of 1.2370. A rebound of the pair's course from 1.2453 will allow traders to count on a reversal in favor of the British currency and a return to the level of 1.2517. The level of 1.2517 has long provided strong support for the bulls.
The wave situation has not raised any questions lately. The last completed upward wave failed to break through the last peak (from March 21), and the new downward wave has already broken the low of the previous wave (from April 1). Thus, the trend for the GBP/USD pair remains "bearish," and there are no signs of its completion. The first sign of bulls transitioning to the offensive may be the breakout of the peak from April 9, but before reaching the zone of 1.2705-1.2715, bulls need to cover a distance of about 260 points, which is unlikely to happen in the coming days.
On Friday, the UK released its GDP report for February, which showed a value of +0.1% m/m. Traders were expecting exactly this growth in the British economy. Industrial production increased in volume for the same period by 1.1%, which exceeded traders' expectations. Nevertheless, the British pound came under heavy market pressure from the early morning, and after closing below the level of 1.2517, it may regain what it has lost in recent months. From November 20 of last year, a sideways trend was forming for the GBP/USD pair. Its lower boundary passed near the level of 1.2517. Thus, fixing below this level indicates that the sideways trend is complete, and bears are ready to start forming a trend. Therefore, the British pound may significantly depreciate in value in the coming weeks and months. Especially since inflation in the USA is rising, which postpones the first easing of the Fed's monetary policy to a later date.
On the 4-hour chart, the pair reversed in favor of the American after forming a "bearish" divergence on the CCI indicator and fell to 1.2450. Rebounding the pair's course from this level will favor the British pound and some growth towards 1.2620. However, the descending trend channel continues to characterize traders' sentiment as "bearish." A "bullish" divergence on the CCI indicator allows for some growth of the British pound. Fixing the pair's course below the level of 1.2450 will increase the probability of further decline towards the next corrective level of 50.0% (1.2289).
Commitments of Traders (COT) Report:
The "Non-commercial" trader category sentiment for the last reporting week has become less "bullish." The number of long contracts held by speculators decreased by 18352 units, and the number of short contracts decreased by 3190. The overall sentiment of large players remains "bullish" but has weakened in recent weeks. The gap between the number of long and short contracts is already less than double: 80 thousand versus 52 thousand.
Prospects for a decline remain for the British pound, but over the past three months, the number of long contracts has increased from 61 thousand to 80 thousand, while the number of short contracts has remained virtually unchanged. Bulls will start getting rid of buy positions over time, as all possible factors for buying the British pound have already been worked out. Bears have demonstrated their weakness and complete unwillingness to go on the offensive recently, but the USA's inflation report may give them confidence and strength.
News Calendar for the USA and the UK:
USA - Retail Sales Volume Change (12:30 UTC).
On Monday, the economic events calendar contains one entry that could be more important. The impact of the news background on market sentiment today will be weak.
Forecast for GBP/USD and trader advice:
Sales of the British pound could be opened on a rebound from the zone of 1.2705-1.2715 with the target zone of 1.2584-1.2611. This zone has been worked out and overcome, so sales could be maintained with the target of 1.2517, which has also been worked out and overcome. On Friday, the next target was reached - 1.2453. New sales are possible upon fixation below 1.2450 with the target of 1.2370. Purchases are possible on a rebound on the 4-hour chart from the level of 1.2450 with targets of 1.2517 and 1.2584.