On the hourly chart, the GBP/USD pair rebounded from the corrective level of 50.0% (1.2464) on Wednesday and started a weak upward movement toward the level of 1.2517. If the pair's rate consolidates below the level of 1.2464, the probability of further decline of the British pound towards the next Fibonacci level of 61.8%–1.2370 will increase. Consolidation of quotes above the level of 1.2517 will allow traders to expect a continuation of the upward movement towards the Fibonacci level of 38.2%–1.2565.
The wave situation remains unchanged. The last completed upward wave did not exceed the peak of the previous wave, and the new downward wave is still too weak to break the low of April 22nd. 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 a shift in favor of bulls may be the breakthrough of the peak on May 3rd. If the new downward wave turns out to be weak and does not break the low of April 22nd, it may also indicate a trend reversal. Waves in recent months have been quite large, so it is necessary to reduce the scale of the hourly chart to understand the current trend clearly.
On Monday, Tuesday, and Wednesday, there was no news from the UK and the US. However, today, the Bank of England will inform traders about the results of the meeting, which almost always triggers a response. What reaction can be expected today? Undoubtedly, everything will depend on the position that the Bank of England and Andrew Bailey personally take. I will consider the meeting results "dovish" if two or more members of the MPC vote in favor of rate cuts and Andrew Bailey announces plans to lower the rate several times this year. In this case, the decline of the British pound should continue. If no more than one member of the MPC votes in favor of rate cuts and Andrew Bailey talks about the need to wait for more evidence of inflation moving towards the target level, then bulls may take over.
On the 4-hour chart, the pair rose to the level of 1.2620 and rebounded from it. The upper line of the descending trend corridor is broken, but it is still too early to bury the "bearish" trend. This week, a decline towards the level of 1.2450 began. Consolidation of the pair's rate below the level of 1.2450 will increase the probability of further decline towards the next correction level of 50.0% (1.2289). There are no imminent divergences today.
Commitments of Traders (COT) Report:
The sentiment of the "non-commercial" trader category became more "bearish" over the last reporting week. The number of long contracts held by speculators decreased by 4791 units, while the number of short contracts decreased by 2034 units. The overall sentiment of large players has changed, and now bears dictate their terms in the market. The gap between the number of long and short contracts is 30 thousand: 43 thousand versus 73 thousand.
The prospects for a decline in the British pound are still in place. Over the last 3 months, the number of long contracts has decreased from 62 thousand to 43 thousand, while the number of short contracts has increased from 47 thousand to 73 thousand. 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 worked out. The bears have demonstrated their weakness and complete unwillingness to advance over the past few months, but I still expect a stronger decline in the British pound.
News Calendar for the US and the UK:
UK - Bank of England Interest Rate Decision (11:00 UTC).
UK - BoE Rate Vote Results (11:00 UTC).
UK - Bank of England Governor Andrew Bailey Speech (11:30 UTC).
UK - Bank of England Governor Andrew Bailey Speech (13:15 UTC).
US - Initial Jobless Claims (12:30 UTC).
Thursday's economic event calendar contains quite important entries. The impact of the news background on market sentiment today could be significant.
GBP/USD Forecast and Trader Advice:
Selling the British pound was possible upon consolidation on the hourly chart below the level of 1.2565, with targets at 1.2517 and 1.2464. Both targets were achieved. New sales are possible upon closing below the level of 1.2464 with a target of 1.2370. Buying opportunities could be considered upon a rebound from the level of 1.2464 on the hourly chart with targets at 1.2517 and 1.2565. Today, after the Bank of England meeting, any movement is possible.