On the hourly chart, the GBP/USD pair continued its downward trend on Tuesday after settling below the level of 1.2201. Thus, there is nothing to prevent the pound from falling to the level of 1.2112 today or tomorrow. A rebound of quotes from this level will work in favor of the British currency and some growth towards 1.2201. Closing the pair's rate below 1.2112 will increase the chances of further decline towards the next corrective level of 200.0% (1.2039).
Since the same downward wave has been forming for the sixth day in a row, the overall picture has not changed since Tuesday. The "bearish" trend persists, and at the moment, there is no sign of its completion. I would like to remind you that, for any signs to appear, there must be at least some growth in the pair. If there is no growth, signs cannot theoretically appear.
The information background for the pound has been even more scarce in recent days than for the euro. However, it is the pound that we continue to observe daily declines in, which no level can stop. I believe that the reason lies not even in the recent meeting of the Bank of England, when the decision was made not to raise the rate, but in the proximity of the moment when the British regulator will end its rate hike. It should be noted that all three central banks are close to this moment, and all three state that a new tightening will occur only if inflation begins to rise sharply. In the United States, it has already started to rise, so an interest rate increase to 5.75% can be expected in November. In the UK and the EU, inflation remains high, but both central banks somehow started preparing for the end of tightening too early. This factor could be pushing the pound and the euro down.
On the 4-hour chart, the pair continues its downward movement and has consolidated below the corrective level of 50.0% (1.2289). Thus, the pound's decline may continue towards the next level at 1.2008. A new bullish divergence for the CCI indicator is imminent, which suggests some growth, but it has not formed yet. The level of 1.2250 on the hourly chart has not stopped the decline either. It is already practically free.
Commitments of Traders (COT) Report:
The sentiment among "non-commercial" traders in the past reporting week has become less bullish again. The number of long contracts held by speculators decreased by 12,270 units, while the number of short contracts increased by 221 units. The overall sentiment of major players remains bullish, and the gap between the number of long and short contracts is narrowing every week; it's already 85,000 versus 55,000. In my opinion, the British pound had good prospects for further growth, but now many factors have turned in favor of the US dollar. I don't expect a strong pound rally in the near future. I believe that over time, bulls will continue to liquidate their buy positions, just like in the case of the European currency. The market situation can only be changed by the Bank of England if it continues to raise interest rates for a longer period than planned, but the recent meeting showed that this factor may not be relied upon.
News Calendar for the US and the UK:
US - Core Durable Goods Orders (12:30 UTC).
On Wednesday, the economic events calendar includes only one fairly important entry. The impact of the news background on market sentiment today will be weak.
GBP/USD Forecast and Trader Advice:
Selling the pound was possible when it closed below 1.2201 with a target of 1.2112 on the hourly chart. At the moment, these positions can be kept open. I do not currently recommend buying in such a strong "bearish" trend; there are no "bullish" signals at this time.
