The wave situation remains unchanged for now. The latest upward wave easily broke through the peak from May 3, while the last completed downward wave couldn't even breach the 1.2788–1.2801 zone. Thus, the trend for the GBP/USD pair remains "bullish," with the bulls having a significant advantage. The first sign of the end of the "bullish" trend will appear only when a new downward wave manages to break the low of the previous wave from May 30. I believe we should be prepared for a fall in the pound sterling, but first, the bears need to at least break through the 1.2690–1.2705 zone.
The news background was weak for both the British pound and the US dollar on Thursday, but today promises to be very interesting. Bears face another test. Many recent US reports have shown weaker-than-expected figures. Today, at least two statistical indicators could deal a blow to the US dollar. If the bulls are currently hesitating on whether to continue their attacks, any worse-than-expected Nonfarm Payrolls and unemployment data could remove their doubts. Bears, on the other hand, are left hoping not even for positive US statistics but for the bulls to retreat, as they clearly need more strength and desire to advance.
On the 4-hour chart, the pair reversed in favor of the British currency and broke above the 61.8% retracement level at 1.2745. Thus, the growth process may continue toward the next level at 1.3044. No emerging divergences are observed in any indicator today. The levels and zones on the hourly chart are currently stronger than on the 4-hour chart. I advise paying more attention to them.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" category of traders became more "bullish" over the last reporting week. The number of long contracts held by speculators increased by 24,503, while the number of short contracts increased by 154. The overall sentiment of large players has changed again, and now the bulls have a solid advantage. The gap between the number of long and short contracts is 26 thousand: 93 thousand versus 67 thousand.
The British pound still has good prospects for a decline, but the bears are still not ready to advance. Over the past 3 months, the number of Long positions has increased from 83 thousand to 93 thousand, and the number of Short positions has grown from 49 thousand to 67 thousand. Over time, the bulls will continue to reduce Buy positions or increase Sell positions, as all possible buying factors for the British pound have already been accounted for. However, the key factor will be the desire and capability of the bears, not the news background or COT report data.
News Calendar for the USA and the UK:
- USA – Nonfarm Payrolls (12:30 UTC)
- USA – Unemployment Rate (12:30 UTC)
- USA – Average Hourly Earnings (12:30 UTC)
The economic event calendar contains three entries on Friday, all of which are very important for the market and the dollar. The news background could have a strong impact on market sentiment today.
Forecast for GBP/USD and Tips for Traders:
Sales of the British pound are possible today on a rebound from the 1.2788–1.2801 zone with a target of 1.2690–1.2705. Purchases can be made on a break above the 1.2788–1.2801 zone with a target of 1.2892. Traders' sentiment today will depend on the US news background in the second half of the day.
