FX.co ★ GBP/USD. February 8th. The British currency returns to a sideways trend

On the hourly chart, the GBP/USD pair continued its upward movement on Wednesday and consolidated above the resistance zone of 1.2584–1.2611, which previously served as a support zone. Thus, the upward movement can be continued towards the next corrective level at 61.8%–1.2715. Consolidation of quotes below the zone of 1.2584–1.2611 will favor the US dollar and a resumption of the decline towards the levels of 1.2513 and 1.2453.

The wave situation remains very ambiguous.

Trends are quite short-term; almost all the time, we see single waves or triplets alternating with each other and having approximately the same size. Trader sentiment has changed to "bearish," allowing for the expectation of a prolonged decline in the British currency. However, bears once again show their weakness. The latest downward wave confidently and deeply broke the low of the previous wave, but the key is the exit from the sideways trend, indicating a transition to the "bearish" trend stage. Now I expect the completion of the upward corrective wave, after which - a new decline in the pound.

The background information on Wednesday was absent. Throughout the day, there were no reports in either Britain or the United States. But in America, FOMC members Harker and Barkin spoke. The first said that the regulator would be able to achieve a "soft landing" for the economy. The second - that patience should be shown in the matter of rate cuts. Even from these two phrases, traders could understand that the Fed will not rush to ease monetary policy. Jerome Powell has already said this twice; his colleagues have said it, and the good state of the US economy allows the regulator not to hurry anywhere. I believe that in March, the interest rate in America will not be lowered, which should provide support for the dollar bulls.

On the 4-hour chart, the pair consolidated below the level of 1.2620, which signaled the completion of the sideways trend and allowed for a decline towards the level of 1.2450. As I mentioned earlier, trader sentiment began to shift to "bearish" after consolidating below the ascending trend channel, but it took a month and a half for bears to go on the offensive. Today, a bounce from the level of 1.2620 is required for the pair to make a new reversal in favor of the American currency and resume the decline. No emerging divergences are observed today.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category has not changed much over the past reporting week. The number of long contracts held by speculators increased by 4900 units, and the number of short contracts increased by 2184 units. The overall sentiment of major players changed to "bearish" several months ago, but at the moment, bulls still have a significant advantage. There is an almost twofold gap between the number of long and short contracts: 77 thousand versus 43 thousand.

In my opinion, the prospects for the pound's decline remain excellent. I believe that over time, bulls will start getting rid of buy positions, as all possible factors for buying the British pound have already been worked out. The growth we have seen in the last three to four months, in my opinion, is corrective. For almost two months, bulls have been unable to break the level of 1.2745. However, the bears are in no hurry to go on the offensive and cannot cope with the zone of 1.2584–1.2611.

News Calendar for the US and the UK:

US - Initial and Continuing Jobless Claims (13:30 UTC).

On Thursday, the economic events calendar contains only one insignificant entry. The impact of the information background on market sentiment today will be absent or very weak.

GBP/USD Forecast and Trader Advice:

Sales of the pair could be considered when consolidating below the support zone of 1.2584–1.2611 with a target of 1.2513. This target was almost worked out. Today, selling is possible when consolidating below the zone of 1.2584–1.2611 with the same target. Purchases were possible when closing above 1.2611 on the hourly chart with a target of 1.2715.