According to the hourly chart, the GBP/USD pair performed a reversal in favor of the British yesterday and resumed the growth process, ending up at the level of 1.2600, from which it twice rebounded a day earlier. At the time of writing, the pair has already completed three rebounds from this level and is currently making a new attempt to close higher. I believe that this level will not withstand the pressure of bull traders. Each time the pair retreated from the specified level by no more than 100 points, which means that the mood of traders remains unchanged. Quotes have left the upward trend corridor, but they continue to grow. The mood of traders can still be characterized as "bullish". There was not a single piece of news worth attention in the UK today. Around this time, the US releases a report on GDP in the first quarter. This is not the first report on the first quarter, as in the US, three estimates are published for each quarter. Already the first assessment clearly showed what traders should expect. The US economy shrank by 1.4% in the first quarter, and it is unlikely that the next two estimates will be much better. Today, this report can once again help bull traders. And last night, the minutes of the last Fed meeting, which took place in May, when the rate rose to 1%, was released. From my point of view, it contained the information that traders were waiting for. For example, it was said that at the next two meetings, the majority of Fed members will support a rate increase of 1% at once. This is exactly the approach that FOMC representatives have repeatedly voiced in their speeches, and therefore the protocol did not become some kind of revelation. Jerome Powell continues to convince us that the American economy is not in danger of a recession, and in this case, it is even more necessary to raise the rate, because the economy is facing the highest inflation. It is already so, but the slower the regulator acts, the longer it will remain the highest in 40 years. Thus, two rate increases of 0.50% at once are almost inevitable.
On the 4-hour chart, the pair performed a reversal in favor of the US currency after the formation of a "bearish" divergence at the CCI indicator. And then a reversal in favor of the British after the formation of "bullish" divergences in the CCI indicator. And now the MACD indicator is brewing a new "bearish" divergence, which may again work in favor of the US currency and a new fall in the direction of the corrective level of 127.2% (1.2250).
Commitments of Traders (COT) Report:
The mood of the "Non-commercial" category of traders has not changed too much over the past week. The number of long contracts in the hands of speculators decreased by 2,856 units, and the number of shorts - by 3,213. Thus, the general mood of the major players remained the same, "bearish". The ratio between the number of long and short contracts for speculators still corresponds to the real picture on the market - longs are 4 times more than shorts (105,854-26,613), and large players continue to get rid of the pound. Thus, I expect that the pound may resume its decline in the coming weeks. But also such a strong gap between the number of longs and shorts may indicate a change in the trend in the market. Therefore, I do not rule out the fact that the pound has completed its long fall.
News calendar for the US and the UK:
US - number of initial applications for unemployment benefits (12:30 UTC);
US - change in the volume of GDP for the quarter (12:30 UTC).
On Thursday, the calendar of economic events in the UK is empty. There are two reports in the USA today, and the most important one is on GDP. I believe that the information background in the afternoon can have a restrained effect on the mood of traders.
GBP/USD forecast and recommendations to traders:
I recommended selling the pound if a rebound from the 1.2600 level is performed on the hourly chart with the goals of the lower boundary of the corridor and 1.2432. And I continue to recommend it since the fourth rebound from this level is already possible. I do not recommend buying a pound yet, as the fall may continue in the next couple of days due to divergence on the 4-hour chart.