On the hourly chart, the GBP/USD pair remained below the zone of 1.2892–1.2931 on Friday, allowing for the expectation of a continued decline towards the next support zone of 1.2788–1.2801. I am still not temporarily considering the pound's growth, as the pair recently broke below the upward trend channel. A rebound from the zone of 1.2788–1.2801 could allow for a slight increase in the pound.
The wave situation has changed slightly. The last completed downward wave (which started forming on June 12) managed to break the low of the previous downward wave, and the last upward wave broke the peak of the previous upward wave. Thus, we are currently dealing with a "bullish" trend. The pound's growth may continue, but now traders need to form a corrective downward wave. There is no talk of a trend change to "bearish" from a wave perspective yet. For this to happen, the pair must break the last low from July 2. Whether the bears have the strength to reach this level is a big question.
Friday's information background allowed the dollar to continue growing, but the bears were not inclined to work out the consumer sentiment indices and PCE. They are likely already focused on this week, when the Bank of England meeting will take place in the UK, and a series of important reports will be released in the US. The Bank of England may start easing monetary policy, and the probability of this is quite high. Inflation has dropped to 2%. There are some questions about core inflation and inflation in the service sector, but in pursuit of reducing these indicators, the regulator cannot allow the main indicator to continue slowing down. Otherwise, the reverse process of accelerating inflation to 2%, which the British regulator was engaged in before the pandemic, will begin. My view is that the rate will be lowered, and the pound will continue to fall. If the Bank of England decides to wait a little longer, the mood of the Monetary Policy Committee will surely become more "dovish," which is also bad for the pound.
On the 4-hour chart, the pair rebounded from 1.3044, forming a "bearish" divergence on the RSI indicator. Earlier, the same indicator entered the overbought zone. Thus, several sell signals were received on the higher chart. The downward process may continue towards the 61.8% corrective level at 1.2745. On the hourly chart, the bears closed below the trend channel, allowing for the expectation of the pair's continued decline.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category became even more "bullish" over the last reporting week. The number of long positions in the hands of speculators increased by 5202 units, while the number of short positions decreased by 4079. Bulls still have a solid advantage. The gap between long and short positions is already 142 thousand: 188 thousand versus 46 thousand.
I think the pound still has prospects for decline, but the COT reports currently indicate the opposite. Over the last three months, the number of long positions has grown from 98 thousand to 188 thousand, while the number of short positions has decreased from 54 thousand to 46 thousand. Over time, professional traders will likely start getting rid of long positions or increasing short positions again, as all possible factors for buying the British pound have already been worked out. However, it should be remembered that this is just a supposition. Graphical analysis indicates a likely decline in the near future, but this does not mean the decline will last for several months or half a year.
News Calendar for the US and UK:
On Monday, the economic events calendar does not contain any entries. The influence of the information background on market sentiment will be absent today.
Forecast for GBP/USD and Trading Advice:
Selling the pound was possible on the rebound from the 1.3044 level on the 4-hour chart with the target of the lower boundary of the upward channel. These sales can now be held open with the target zone of 1.2788–1.2801. I consider purchases unadvisable in the near future.
Fibonacci level grids are constructed at 1.2892–1.2298 on the hourly chart and at 1.4248–1.0404 on the 4-hour chart.