On the hourly chart, the GBP/USD pair continued to trade between the levels of 1.2464 and 1.2517 on Friday and only managed to consolidate above the level of 1.2517 on Monday. However, I would not rush to buy the British pound, as the recent movement is a corrective wave. Thus, bears may counterattack soon and push the pair back to the level of 1.2300. Certainly, strong news regarding the dollar is required for this. And it will come this week.
The wave situation remains unchanged. The last completed downward wave broke the low of the previous wave, and the new upward wave has not yet come close to the last peak from April 9. Thus, the trend for the GBP/USD pair remains "bearish," and there are no signs of its completion at the moment. The first sign of bulls switching to the offensive could be the breakout of the peak from April 9, but bulls need to cover a distance of about 220 ps to the zone of 1.2705–1.2715. It is unlikely that a trend change to "bullish" can be expected in the coming days. A new downward wave, if weak and fails to break the low from April 22, could also indicate a trend change.
On Friday, bulls and bears failed to determine the winner. Today, until the close below the level of 1.2517, bulls will retain chances for growth, but below this level, bears may go on the offensive. This week, several important reports will be released in America, which should be closely monitored. Bears are awaiting informational support to continue the trend. Thus, they are heavily counting on strong Nonfarm Payrolls, unemployment, and ISM indices. They also rely on the most "hawkish" rhetoric possible from Jerome Powell, who will speak on Wednesday immediately after the FOMC meeting. The most important indicator, the rate, will not change, but Powell's speech is always a way to glimpse a little into the future. At the moment, traders expect the first rate cut in the US no earlier than the fourth quarter.
On the 4-hour chart, the pair consolidated above the level of 1.2450. Thus, the growth process may continue towards the next level of 1.2620, but most likely, it will end soon, and the pair will not leave the descending trend channel. No imminent divergences were observed in any of the indicators today. A bounce of the pair's rate from the upper line of the corridor will favor the American and the resumption of the decline.
Commitments of Traders (COT) report:
The sentiment of the "Non-commercial" trader category for the last reporting week has become more "bearish." The number of long contracts held by speculators decreased by 23341 units, while the number of short contracts increased by 11511 units. The overall sentiment of major players has changed, and now bears are dictating their terms in the market. The gap between the number of long and short contracts is 48 thousand against 75 thousand.
In my opinion, there are prospects for a decline in the British pound. Over the past 3 months, the number of long positions has decreased from 62 thousand to 48 thousand, while the number of short positions has increased from 47 thousand to 75 thousand. I believe that over time, bulls will start to get rid of buy positions or increase sell positions, as all possible factors for buying the British pound have already been exhausted. Bears have demonstrated their weakness and complete unwillingness to switch to the offensive over the past few months, but I still expect the British pound to begin a stronger decline.
News calendar for the USA and the UK:
On Monday, the economic events calendar does not contain any important entries. The impact of the information background on the market sentiment will be absent today.
Forecast for GBP/USD and trader recommendations:
Sales of the British pound are possible today upon consolidation on the hourly chart below the level of 1.2517 with targets at 1.2464 and 1.2363–1.2370. Purchases of the pair were possible on a rebound from the level of 1.2464 and upon closing above 1.2517 with a target of 1.2565. At the moment, these trades can be held until closing below 1.2517.