On the hourly chart, the GBP/USD pair on Monday experienced growth to the corrective level of 38.2%-1.2565, followed by a rebound. Thus, a reversal in favor of the American currency occurred, and the process of decline toward the level of 1.2517 began. If the pair's exchange rate consolidates below this level, it will increase the likelihood of further decline towards the next Fibonacci level of 50.0%-1.2464. A rebound of quotes from the level of 1.2517 will allow traders to expect a resumption of growth towards the levels of 1.2565 and 1.2611.
The wave situation remains unchanged. The last completed downward wave broke the low of the previous wave, and the new upward wave has yet to approach the last peak from April 9th. Thus, the trend for the GBP/USD pair remains "bearish," and there are currently no signs of its completion. The first sign of a shift to a bullish stance could be a breakthrough of the peak from April 9th, but bulls need to overcome a distance of about 220 pips to the zone of 1.2705–1.2715. It is unlikely that a trend change to "bullish" should be expected in the coming days. A new downward wave, if weak and does not break the low from April 22nd, could also indicate a trend change.
On Monday, there was no significant news for GBP/USD, and today - there will be no important news either in the UK or in the US. However, the next three days of the week could significantly influence the movement of the pair's quotes. Already on Wednesday evening, the results of the third FOMC meeting of the year will be announced. The interest rate is expected to remain at 5.5%, and Jerome Powell is expected to maintain a "hawkish" rhetoric, as the US Consumer Price Index has been accelerating in recent months rather than decreasing. At the moment, there are no reasons for the FOMC to discuss a rate cut. Some changes in the QT program are possible, but they are not significant for the US currency.
On the 4-hour chart, the pair consolidated above the level of 1.2450. Thus, the upward movement may continue towards the next level of 1.2620, but most likely, it will end soon near the upper line of the descending trend channel. No impending divergences are observed in any indicator today. A rebound of the pair's exchange rate from the upper line of the channel will work in favor of the American and the resumption of the decline towards the Fibonacci level of 50.0%-1.2289.
Commitments of Traders (COT) report:
The sentiment of the "non-commercial" trader category became more "bearish" over the past reporting week. The number of long contracts held by speculators decreased by 23,341 units, while the number of short contracts increased by 11,511 units. The overall sentiment of major players has changed, and now bears dictate their terms in the market. The gap between the number of long and short contracts is: 48,000 versus 75,000.
There are still prospects for a decline in the pound. Over the past three months, the number of long positions has decreased from 62,000 to 48,000, while the number of short positions has increased from 47,000 to 75,000. 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 reluctance to advance over the past few months. However, I still expect the pound to start a more significant decline.
News calendar for the US and UK:
On Tuesday, the economic events calendar contains only some important entries. The influence of the information background on market sentiment today will be absent.
Forecast for GBP/USD and advice for traders:
Selling the pound is possible today upon rebound on the hourly chart from the level of 1.2565, with targets at 1.2517 and 1.2464. Selling is also possible upon consolidation below 1.2517. Buying the pair was possible upon a rebound from the level of 1.2464 and upon closing above 1.2517 with a target of 1.2565. This target has been achieved. Today, buying is possible upon rebounds from 1.2517 or 1.2464, but the strength of the bulls is waning.