On the hourly chart, the GBP/USD pair on Friday reversed in favor of the US dollar and dropped approximately 150 points. It failed to stay within the sideways corridor, although the decline could have ended near the lower boundary of this corridor. In that case, the "bullish" sentiment would have been preserved, but at the moment, I can conclude that the bears have gone on the offensive, and the pair may continue to fall in the direction of the 1.2342 level.
On Friday, traders received only American statistics. At least three reports were important for the prospects of the US dollar, but in total, they did not allow any significant conclusions to be drawn. The statistics from the US were just one of the reasons for the pair's decline. I can put the word "correction" in the first place. No pair can constantly move in one direction, and corrections do not necessarily appear with accompanying informational background. Returning to it, the reports from the US turned out to have different meanings. Retail sales decreased in March by 1% m/m, but industrial production grew by 0.4% m/m. Traders expected a higher value from the first indicator and a lower one from the second. The University of Michigan's consumer sentiment index was also released, slightly increasing to 63.5 points (slightly above traders' expectations). However, these reports are less important than causing the dollar to rise by 150 points with mediocre values. Thus, the American economy is in good shape, and the most important indicators of its state are the labor market, unemployment, inflation, and economic growth. These data can influence the sentiment of traders and lead to trend reversals. Other data is just a weak background that can affect the pair's movement within the day, no more.
On the 4-hour chart, the pair reversed in favor of the US dollar and consolidated below the ascending trend corridor and the 1.2441 level. I believe the exit from the corridor is a very important graphic signal, indicating a change in sentiment to "bearish." In the near future, I expect a continuation of the quote decline toward the corrective level of 127.2% (1.2250). The overall decline of the pound might be even stronger. No emerging divergences are observed today in any of the indicators.
The Commitments of Traders (COT) report:
The sentiment of the "non-commercial" category of traders changed significantly during the last reporting week. The number of long contracts in the hands of speculators increased by 8,513 units, while the number of short contracts increased by 3,882. The overall sentiment of major players remains "bearish," and the number of short-term contracts still exceeds the number of long-term contracts. But only slightly. Ironically, market sentiment may change to "bearish" now, as specific sell signals exist. Over the past few months, the situation has constantly changed in favor of the pound, but nothing lasts forever. Thus, the prospects for the pound remain good, but in the near future, its decline should be expected.
Economic news calendar for the US and UK:
On Monday, the economic events calendar did not contain any interesting information. The influence of the informational background on traders' sentiment will be absent today.
GBP/USD forecast and advice for traders:
I advise selling the pound with targets of 1.2342 and 1.2295 until closing above the 1.2441 level. Or in case of a rebound from this level from below. New pound purchases will be possible upon closing above the 1.2441 level on the 4-hour chart with targets of 1.2546 and 1.2623.
