On the hourly chart, the GBP/USD pair on Wednesday consolidated below the 161.8% corrective level at 1.3110, thus exiting the sideways range. The decline continued almost to the 200.0% level at 1.3024. A rebound from the 1.3024 level will work in favor of the British currency and trigger some growth toward 1.3110. Consolidation of the pair below 1.3024 will increase the probability of further decline toward the next level at 1.2931.
The wave situation remains bearish. The last upward wave did not break the previous peak, while the last completed downward wave broke the previous low. Unfortunately for the pound, the news background has deteriorated recently, and now the bulls find it extremely difficult to launch attacks. To end the bearish trend, growth above 1.3470 or the formation of two consecutive bullish waves is required.
For eight days in a row, the pound traded between 1.3110 and 1.3186, but finally left this zone yesterday. Wednesday's news background delivered a clear verdict for the pound—a new decline. Recall that throughout last week, the pound withstood negative UK economic statistics, but a drop in inflation to 3.6% was something it could no longer ignore. Lower inflation in the UK automatically raises the likelihood of monetary easing by the Bank of England at the next meeting to 100%. If at the previous meeting nearly half of the MPC committee voted for a rate cut (with inflation stuck at 3.8% for three months), then at the next meeting the number of "doves" will be even higher. However, the pound should not despair prematurely. Today, for the first time in 2.5 months, reports on the U.S. labor market and unemployment will be released, and there is little reason to expect strong data. Thus, today it may be the U.S. dollar that falls—but everything will depend on the afternoon statistics.
On the 4-hour chart, the pair continues to decline within the downward trend channel. If a new bullish trend is beginning, we will gradually receive confirming signals. I will begin to expect strong appreciation of the pound only after closing above the channel. Consolidation below the 1.3044 corrective level will allow for expectations of continued 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" category became more bullish during the last reporting week, but that week was a month and a half ago. The number of long positions held by speculators increased by 3,704, while short positions decreased by 912. The current gap between long and short positions is essentially 85,000 vs. 86,000. Bullish traders are once again tipping the scales in their favor.
In my view, the pound still retains prospects for decline, but each new month makes the U.S. dollar look weaker. Earlier, traders worried about Donald Trump's protectionist policies, not fully understanding the potential outcomes. Now they may worry about the consequences of that policy: a possible recession, the constant introduction of new tariffs, and Trump's confrontations with the Federal Reserve, which could leave the regulator "politically biased." Thus, the pound looks much less risky than the U.S. currency.
News calendar for the U.S. and the UK:
- U.S. – Nonfarm payrolls (13:30 UTC)
- U.S. – Unemployment rate (13:30 UTC)
- U.S. – Average hourly earnings (13:30 UTC)
The economic calendar for November 20 contains at least two important entries. News impact on market sentiment on Thursday may be strong in the second half of the day.
GBP/USD Forecast and Trader Tips:
Sales were possible when the pair closed below 1.3110 on the hourly chart, targeting 1.3024. Profits on these trades can now be taken. Long positions may be opened on a rebound from 1.3024 with a target of 1.3110, and new short positions may be opened upon closing below 1.3024.
Fibonacci levels are plotted from 1.3247–1.3470 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.
