On the hourly chart, GBP/USD consolidated above the 1.3454–1.3469 support level on Wednesday and subsequently rebounded from it. However, on Thursday morning, the pair returned to this zone. Therefore, another rebound from this zone today would once again favor the pound and could lead to a further rise toward the 1.3526–1.3547 resistance level. Consolidation below the 1.3454–1.3469 level would allow traders to anticipate a decline toward the 50.0% retracement level at 1.3404.
The market situation remains bullish. The latest completed downward wave failed to break below the previous low, while the new upward wave broke above the previous peak. Thus, bulls continue to control the market. The market has already priced in the FOMC's monetary policy tightening in the near future, while the Bank of England's policy tightening is only beginning. As a result, the market has shifted its attention to the pound in advance.
The news background on Wednesday allowed bullish traders to continue their advance, but Thursday did not start on a particularly positive note for them. The Bank of England's decision will be announced in a few hours, and the market expects monetary policy tightening. However, traders may have already priced in this decision, as it is hardly a surprise. Therefore, a continuation of the upward movement today would be justified. A decline would also be understandable. The 1.3454–1.3469 support level should serve as the main reference point. Attention should also be paid to the results of the MPC's interest rate vote. The market expects at least six committee members to take a hawkish stance. If the actual number is lower or the decision to tighten monetary policy is not made, this could put significant pressure on the British pound, as the market is already prepared for a rate hike. Conversely, a higher number of hawkish votes would increase the likelihood of further appreciation of the pound.
On the 4-hour chart, GBP/USD has risen to the 61.8% retracement level at 1.3469. A rebound from this level would favor the US dollar and could lead to a decline toward 1.3405 and 1.3348. Consolidation above the 1.3469–1.3482 level would increase the likelihood of further growth toward the next Fibonacci level of 76.4% at 1.3547. No emerging divergences are currently visible in any of the indicators.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category became slightly less bearish over the latest reporting week. The number of Long positions held by speculators increased by 2,417, while the number of Short positions rose by 1,411. The current gap between Long and Short positions stands at approximately 57,000 versus 136,000. The bears' advantage remains substantial and continues to widen over time. Previously, bearish dominance was unquestionable, but this is no longer the case, as the news background has changed over the past few months.
Confidence in a bearish trend for the pound remains low. However, the situation in the near future will depend on Trump's trade policy, the monetary policies of the Federal Reserve and the Bank of England, as well as the duration, scale, and consequences of the war in the Middle East. In recent months, the market had shifted its focus toward peace, but negotiations between Iran and the United States collapsed before they could make any meaningful progress. The war between the two countries could resume on a full scale as early as November.
Economic Calendar for the US and the UK:
- United Kingdom – Bank of England interest rate decision (12:00 UTC).
- United Kingdom – MPC interest rate vote results (12:00 UTC).
- United Kingdom – Bank of England monetary policy statement (12:00 UTC).
- United States – Change in initial jobless claims (13:30 UTC).
On November 5, the economic calendar contains four events, with the Bank of England meeting being the most significant. The economic news could have a strong impact on market sentiment on Thursday.
GBP/USD Forecast and Trading Recommendations:
Selling the pair is possible today if the hourly candle closes below the 1.3454–1.3469 level, with targets at 1.3404 and 1.3342. Buying is possible following a rebound from the 1.3454–1.3469 level, with a target of 1.3526–1.3547.
The Fibonacci levels are drawn from 1.3674 to 1.3136 on the hourly chart and from 1.3674 to 1.3137 on the 4-hour chart.
