On the hourly chart, the GBP/USD pair on Thursday rose to the corrective level of 61.8% (1.2801), rebounded from it, turned in favor of the US currency, and fell below the Fibonacci level of 76.4% (1.2720). Thus, the quote decline may continue toward the next corrective level of 100.0% (1.2590). A pair's rebound from the 1.2720 level will also allow for a drop in the pound on Friday. Consolidation above 1.2720 will bring bulls back into the market, which will try to return the price to 1.2801.
The waves currently tell us nothing new. Although three recent peaks and two recent lows were broken yesterday, the movement remains horizontal, clearly visible even without any indicators. A crucial point today will be a rebound from the 1.2720 level. A new downward wave will form if it occurs, ending the sideways movement. If there's a closure above 1.2720, the horizontal movement will persist.
An hour ago, the UK released the first reports for this week, which, it must be noted, could have pleased the pound sterling. But they didn't delight bullish traders much, judging by their initial reaction. The pound increased by 35 points, and its rise has ended. The GDP in the second quarter unexpectedly grew by 0.2% instead of the projected 0%, and industrial production increased by 1.8%, surpassing traders' expectations of +0.1%.
Thus, the pound could have shown even more substantial growth. It may still do so, as the day isn't over. But much today will depend on the 1.2720 level, which might hinder the pair's growth.
On the 4-hour chart, the pair favored the pound after forming a "bullish" divergence at the CCI indicator. However, over the subsequent 5-6 days, the pair couldn't even rise to the 1.2846 level, and on the hourly chart, the movement remains horizontal. Currently, there are no looming divergences on any indicators. I don't believe in a strong pound rise under these conditions.
Commitments of Traders (COT) report:
The sentiment of the "Non-commercial" trader category has become less bullish over the past reporting week. The number of long contracts held by speculators decreased by 13,323 units, while the number of short contracts decreased by 3,890. The overall mood of major players remains bullish, and a twofold gap has formed between the number of Long and Short contracts: 92,000 against 42,000. The pound had good growth prospects recently, but now many factors favor the US dollar. Betting on a new strong rise in the pound sterling is becoming increasingly challenging. The market doesn't always account for all dollar support factors, and the pound has recently been rising only based on expectations of new and further rate hikes by the Bank of England.
News calendar for the US and UK:
UK - GDP for the second quarter (06:00 UTC).
UK - Industrial Production (06:00 UTC).
USA - Producer Price Index (PPI) (12:30 UTC).
USA - University of Michigan Consumer Sentiment Index (14:00 UTC).
On Friday, the economic events calendar contains four entries of moderate importance. Two have already been published, and two remain. For the rest of the day, the influence of the news background on the market sentiment might be weak.
GBP/USD Forecast and Advice for Traders:
Yesterday, I advised selling the pound on a rebound from the 1.2801 level on the hourly chart with targets at 1.2720 and 1.2690. Both targets have been reached. Today, sell on a rebound from the 1.2720 level with a target of 1.2590. For purchases today, there's only one possible signal - a close above the 1.2720 level, but be cautious - the pound's growth might be weak.
