On the hourly chart, the GBP/USD pair continued to trade horizontally on Wednesday. The Fibonacci level of 50.0%–1.2464 is currently being ignored by traders as a new sideways channel has formed. This channel is small, but the pair may spend some time there. Trading signals should not be sought around the level of 1.2464. The market could be more active this week. It is better to analyze the chart pattern on the 4-hour chart now.
The wave situation still does not raise any questions. The last completed upward wave failed to break the last peak (from March 21st), and the last downward wave broke the previous wave's low (April 1st). Thus, the trend for the GBP/USD pair remains "bearish," and there are no signs of its completion. The first sign of bulls turning aggressive could be a breakthrough of the peak from April 9th, but bulls need to cover a distance of about 250 points to the zone of 1.2705–1.2715, which is unlikely to happen soon.
Two important events were supposed to occur yesterday, but they were insignificant. Traders reacted to the UK inflation report as if it were a report on business activity in the construction sector, and the rise of the British currency does not reflect the essence of the report itself. Inflation in Britain has slowed down again and is already very close to 3%. The Bank of England may start discussing QE easing in a couple of months. Against Jerome Powell's statement that inflation in the US has stopped decreasing, automatically postponing the policy easing to a later date, bears have the necessary support to continue pushing the pound down. However, a new upward wave has started forming. There is no reason to worry if this wave is corrective and ends soon. However, after several months of trading in a sideways channel, there is a possibility that the pair still tends towards horizontal movement.
On the 4-hour chart, the pair reversed in favor of the British pound after forming two "bullish" divergences on the CCI indicator. Thus, the growth process may continue toward the level of 1.2620. The descending trend corridor characterizes the current sentiment of traders as "bearish," allowing for expectations of new bear attacks. The bulls can only count on a slight increase within the channel.
Commitments of Traders (COT) Report:
The sentiment of the "non-commercial" trader category for the last reporting week has become less "bullish." The number of long contracts held by speculators decreased by 18,352 units, and the number of short contracts decreased by 3,190. The overall sentiment of major players remains "bullish" but has weakened in recent weeks. The gap between the number of Long and Short contracts is now less than double: 80 thousand versus 52 thousand.
There are still prospects for a decline in the British pound, but over the last 3 months, the number of long positions has increased from 61 thousand to 80 thousand, while the number of short positions has hardly changed. Over time, bulls will start getting rid of buy positions as all possible factors for buying the British pound have already been exhausted. Bears have demonstrated weakness and complete reluctance to advance over the past few months, but the US inflation report could give them confidence and strength.
News Calendar for the US and the UK:
US - Initial Jobless Claims (12:30 UTC).
US - New Home Sales (14:00 UTC).
On Thursday, the economic events calendar contains only two entries, neither of which are the most significant. The impact of the news background on market sentiment today may be very weak.
Forecast for GBP/USD and Trader Advice:
I don't see any potential signals for selling the British pound today. Purchases are more interesting today, but the potential for the British pound to rise is limited, the news background is weak, and traders have been ignoring the level of 1.2464 for several consecutive days. Today is not the best day to look for trading signals.
