On the hourly chart, the GBP/USD pair rebounded from the 1.2546 level yesterday, reversed in favor of the US currency, and fell to the corrective level of 100.0% (1.2447) with a shallow closure below it. The pair's quotes have returned above the 1.2447 level, allowing for a slight growth of the pound toward the 1.2546 level. However, I will remind you that the bulls did not hold above the trend line a few days ago, which changed the market sentiment to "bearish." Therefore, I expect a further decline in quotes.
Today in the UK, only a speech by the Governor of the Bank of England, Andrew Bailey, should take place, but there currently needs to be more information. The pound continued to fall in the first half of the day, which began yesterday after British statistics were much worse than traders expected. I have repeatedly talked about the fact that the British economy is now raising the most questions, as GDP has not been growing for three quarters in a row, inflation is practically not slowing down, and the Bank of England shows with its actions and rhetoric that the end of the tightening process is approaching. The British regulator's rate has already risen to 4.5%, which is only slightly lower than the rate of the much more powerful Fed.
The current fall of the British pound is related to the fact that traders overestimated the Bank of England's capabilities and the British economy's state. For a long time, there was confidence in the market that the economy would face a strong and long-term recession, but at the beginning of this year, it became clear that the recession would be weak and short-term. There is also every chance that the economy will avoid it. On a wave of optimism, the pound rose for two months, but now the bulls have fully worked out all their factors. Thus, I am waiting for a continuation of the quote decline. I will also note that economic indicators are declining everywhere: in the European Union, the UK, and the US. This is related to the tightening of the MPC over the past year. Therefore, it is impossible to say that the dollar is now growing because the economic situation in the UK or the EU is deteriorating.
On the 4-hour chart, the pair performed a new fall to the 1.2441 level. A new rebound from this level will favor the British pound and the resumption of the upward trend towards the Fibo level of 100.0% (1.2674). Consolidating the pair's rate below the 1.2441 level will favor the US currency and the resumption of the fall towards the next corrective level of 127.2% (1.2250). No emerging divergences are observed today with any indicator.
Commitments of Traders (COT) report:
The sentiment of the "non-commercial" trader category became more "bullish" during the last reporting week. The number of long contracts held by speculators increased by 12,900 units, and the number of short contracts - by 9,437. The overall sentiment of the major players remains fully "bullish" (for a long time, it was "bearish"), but the number of long and short contracts is now almost the same - 71.5 thousand and 67 thousand, respectively. The British pound continues to grow predominantly, although very few factors support buyers. Since the ratio of long and short is almost equal, the pound cannot be considered overbought. The prospects for the Briton remain good, but in the near future, it is possible to expect a fall from it, as it has been growing for a long period.
News calendar for the US and the UK:
UK - Speech by the head of the Bank of England, Bailey (09:50 UTC).
US - Number of building permits issued (12:30 UTC).
On Wednesday, the economic events calendar contained only two interesting entries. The influence of the information background on the sentiment of traders for the rest of the day will be strong only in the case of important statements from Andrew Bailey.
GBP/USD forecast and trader advice:
I advised selling the Briton when it rebounded from the 1.2546 level on the hourly chart with a target of 1.2447. The target has been reached. New sales - when closing below 1.2447 with a target of 1.2342. I advise buying the Briton when it rebounds from the 1.2441 level on the 4-hour chart with a target of 1.2546.
