On the hourly chart, the GBP/USD pair on Monday first rebounded from the 1.3139 level, and then from the 127.2% corrective level at 1.3186. Thus, the sideways movement on the hourly chart remains, and traders can only wait for rebounds from its boundaries. The bulls maintain a positive outlook but are waiting for Thursday and weak U.S. Nonfarm Payrolls and unemployment reports.
The wave situation remains bearish. The new upward wave has not yet broken the previous peak, while the latest downward wave (which formed over three weeks) broke the previous low. The news background in recent weeks has been negative for the U.S. dollar (in my opinion), but bullish traders have not taken advantage of the opportunities to advance. Unfortunately for the pound, the news background has recently deteriorated, and now it is difficult for bulls to mount attacks. To complete the bearish trend, growth above 1.3470 or the formation of two consecutive bullish waves is required.
For seven consecutive days, the pound has been stuck between the 1.3110 and 1.3186 levels. The pound is holding on to its regained positions with great difficulty, but last week showed that traders are currently more inclined to buy than sell. Of course, until the missing U.S. labor market and unemployment reports are released, it is too early to draw conclusions about the strength of bulls and bears. This Thursday, the situation could flip completely. According to September data, payroll growth could be 50,000, which is very low. However, this time I do not expect a simple or logical market reaction. First, the September report is already outdated, as nearly two months have passed, and the Fed has eased monetary policy twice since then. Second, any figure below 150,000–200,000 can be considered low, so the market may easily interpret even 100,000 new jobs as a weak result for the dollar. Movements in GBP/USD this past week have been very complex, and I do not expect simplicity this week either. However, the Nonfarm Payrolls and unemployment reports may at least help the pair break out of the sideways channel.
On the 4-hour chart, the pair continues to fall within the descending trend channel. If a new bullish trend is starting now, we will gradually receive confirmations. I will begin to count on a strong pound rally only after the pair closes above the channel. A consolidation below the 76.4% corrective level at 1.3118 will once again allow us to expect a decline toward the 61.8% Fibonacci level at 1.2925. No emerging divergences are observed today.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category became more bullish in the last reporting week, but that reporting week was a month and a half ago. The number of long positions held by speculators increased by 3,704, while the number of short positions decreased by 912. The gap between long and short positions now stands at approximately: 85,000 vs. 86,000. Bullish traders are once again tipping the balance in their favor.
In my view, the pound still has downward potential, but with each passing month the U.S. dollar looks weaker and weaker. Previously, traders were concerned about Donald Trump's protectionist policies, unsure of what outcomes they might bring. Now they may worry about the consequences of these policies: a possible recession, constant introduction of new tariffs, and Trump's pressure on the Federal Reserve, which may lead to the regulator becoming politically biased. Thus, the pound looks much less dangerous than the U.S. currency.
News Calendar for the U.S. and the U.K.:
On November 18, the economic calendar contains no notable entries. The news background will not influence market sentiment on Tuesday.
GBP/USD Forecast and Trading Tips:
Sales of the pair are possible today if the price closes below 1.3110 on the hourly chart, with a target of 1.3024, or on a rebound from 1.3186 targeting 1.3110. Long positions can be opened on a rebound from 1.3110 with targets at 1.3186 and 1.3247, or on a close above 1.3186.
The Fibonacci grids are built using 1.3247–1.3470 on the hourly chart and 1.3431–1.2104 on the 4-hour chart.
