According to the hourly chart on Friday, the GBP/USD pair continued its decline and closed below the level of 1.2432, allowing traders to expect further declines toward the next level of 1.2342. The pair has gone down four days in a row, but the drop has been so small that the rate has stayed within the rising trend corridor. This means that traders are "bullish." The growth of the British pound could easily and quickly resume. Closing quotes below the corridor will favor the US dollar and the continuation of the decline toward the level of 1.2238.
The informational background on Friday for the British pound was the same as for the euro. Traders confidently ignored it, but we will see the US dollar rise this week. However, on Wednesday, the week's most important report will be released in the US - inflation for March. Official forecasts suggest a slowdown in price growth to 5.2%, which could prompt bull traders to return to the market. Inflation in the US is falling rapidly, so it no longer makes sense for the FOMC to continue pushing the plan to tighten monetary policy. The market expects only one rate hike this year, possibly in May. However, a rapid decline in the consumer price index could prompt the Fed to abandon a rate hike in May.
At the same time, inflation in the EU and the UK is falling much more slowly, and both central banks will continue raising their rates for some time. In the case of the ECB, the rate may continue to rise by 0.50% for at least one more meeting. Thus, the British pound and the euro may return to growth by the end of this week.
On the 4-hour chart, the pair completed its decline to the lower border of the ascending trend corridor. A bounce-off will allow us to expect a reversal in favor of the British pound and a resumption of growth towards the corrective level of 100.0% (1.2674). The emerging "bullish" divergence will increase the likelihood of growth if it does not cancel out. Closing below the corridor and canceling the divergence will allow the US dollar to strengthen more than it is now, in the direction of the Fibonacci level of 127.2%-1.2250.
Commitments of Traders (COT) report:
The sentiment of the "non-commercial" category of traders has changed significantly during the last reporting week. The number of long contracts held by speculators increased by 18,060 units, while the number of short contracts increased by 8,769. The overall sentiment of major players remains "bearish," and the number of short-term contracts still exceeds the number of long-term contracts. Over the past few months, the situation has constantly changed in favor of the British pound. However, the difference between the number of long and short contracts speculators hold remains significant. Thus, the prospects for the pound are constantly improving, but the British pound has not been growing or falling in recent months. On the 4-hour chart, there was an exit beyond the descending corridor, and this factor could support the pound. However, many factors contradict each other, and the informational background does not provide much support for the British pound. On the same 4-hour chart, the pair may close below the ascending corridor.
News calendar for the US and the UK:
On Monday, the economic event calendar contains only some important entries. The influence of the informational background on traders' sentiment will be absent today.
GBP/USD forecast and trading tips:
I recommend selling the British pound at a close below the level of 1.2432 on the hourly chart or below the trend corridor on the 4-hour chart, with targets at 1.2342 and 1.2250. Buying the British pound is possible upon bouncing off the lower boundaries of the corridors on the hourly or 4-hour charts with a target of 1.2588.
