On the hourly chart, the GBP/USD pair continued its upward movement on Wednesday towards the level of 1.2342 after closing above the Fibonacci level of 161.8% at 1.2250. A rebound of the pair's rate from the level of 1.2342 will work in favor of the US dollar and lead to some decline towards the lower boundary of the ascending trend corridor. The consolidation of quotes above 1.2342 will increase the chances of further growth towards the corrective level of 127.2% (1.2440). Expecting a "bearish" trend will only be possible after closing below the corridor.
The wave situation has become a bit clearer. After breaking the peak on October 6, we can confidently talk about a "bullish" trend. There are currently no signs of the end of this trend. Signs may appear if the pair falls below the level of 1.2175, which will be almost impossible to do today, for example. A simpler sign would be below the ascending corridor.
This morning in the UK, interesting reports on GDP and industrial production were released, but they did not interest traders at all. According to expectations set by the markets, the British economy grew by 0.2% in August. Industrial production declined by 0.7% m/m, despite more optimistic forecasts. Manufacturing lost 0.8%. Thus, there is little reason for buying the pound this morning, but these news had no impact on the "bullish" trend.
In the second half of the day, an inflation report will be released in America, which has a much higher chance of knocking the bulls off their path. It is expected that the Consumer Price Index will remain unchanged at 3.7%. Such figures can either disappoint dollar bulls or inspire optimism. Disappointment because inflation is rising again, which is bad for the economy. Inspire optimism because rising inflation can push the Federal Reserve towards further tightening of monetary policy.
On the 4-hour chart, the pair has consolidated above the Fibonacci level of 50.0% at 1.2289. Two "bearish" divergences with the CCI indicator did not lead to a downward reversal. A rebound of the pair's rate from the upper boundary of the descending trend corridor may work in favor of the US currency and a resumption of the decline towards 1.2008. Closing above the corridor will increase the probability of further growth towards the level of 1.2450.
Commitments of Traders (COT) Report:
The sentiment of "non-commercial" traders has become less "bullish" again during the last reporting week. The number of long contracts held by speculators decreased by 10,839 units, while the number of short contracts increased by 11,510 units. The overall sentiment of major players has shifted to "bearish," and the gap between the number of long and short contracts is widening, but now in the opposite direction: 73,000 versus 80,000. In my opinion, there are still excellent prospects for a decline in the pound. I do not expect a strong pound rally in the near future. I believe that over time, the bulls will continue to get rid of buy positions, as is the case with the European currency. Only closing above the descending corridor on the 4-hour chart will make me think about a new "bullish" trend.
News Calendar for the USA and the UK:
UK - Change in GDP for August (06:00 UTC).
UK - Industrial Production (06:00 UTC).
USA - Consumer Price Index (12:30 UTC).
USA - Initial Jobless Claims (12:30 UTC).
On Thursday, the economic events calendar includes four entries, two of which have already been made public. The impact of the information background on market sentiment today may be of moderate strength.
GBP/USD Forecast and Trader Advice:
Selling the British pound is possible upon closing below the ascending corridor on the hourly chart, with targets at 1.2250 and 1.2175. Buying was possible after closing above the level of 1.2250 on the hourly chart, with a target of 1.2342. These positions can be kept open at the moment. New buys can be considered upon closing above 1.2342 with a target of 1.2440.
