On the hourly chart, GBP/USD fell to the 38.2% Fibonacci retracement level at 1.3342 on Friday, rebounded from this level, and reversed in favor of the British pound. Today, the pair rose to the 50.0% retracement level at 1.3404. A rejection from this level would favor the US currency and a resumption of the decline toward 1.3342. A consolidation above 1.3404 would allow traders to expect further gains toward the 1.3454–1.3469 resistance level.
The market situation remains bullish. The latest completed downward wave failed to break below the previous low, while the latest upward wave broke above the previous high. Thus, the bulls remain in control. The market has already priced in the FOMC's monetary policy tightening in the near term, while the Bank of England's policy tightening cycle is only beginning. A resumption of the pound's upward movement is expected once the corrective pullback is complete.
Friday's news flow gave the bears an opportunity to continue their attacks, and they managed to do so successfully. However, Monday began with a noticeable rise, which appears to be a natural development. The bullish trend remains intact, and the Bank of England began raising interest rates last week and is unlikely to stop here in the near term. Further monetary policy tightening could even take place in December, although most experts expect the next move in February. Overall, the British regulator appears set to tighten policy at a pace similar to that of the Fed and the ECB. It is important for the central bank to avoid raising rates too high, as such a move is not necessary to combat elevated inflation and could overcool the economy. Therefore, rate increases are likely to be cautious and gradual. Many central bank policymakers also expect inflation to slow next year, as the current factors driving price growth are temporary. If no secondary signs of inflation becoming entrenched in the economy emerge, the tightening cycles are likely to be limited. Today, Bank of England Governor Andrew Bailey is scheduled to speak and may offer the market hints about the bank's plans for December.
On the 4-hour chart, GBP/USD rebounded from 1.3342 and reversed in favor of the British pound. Thus, the upward movement may resume within the ascending trend channel, fully in line with the current outlook. A return to the 1.3469–1.3482 resistance level may follow in the near term. No emerging divergences are currently visible on any of the indicators.
Commitments of Traders (COT) Report
The sentiment of the "Non-commercial" trader category became less bearish over the latest reporting week. The number of Long positions held by speculators increased by 7,135, while the number of Short positions declined by 12,458. The gap between Long and Short positions currently stands at approximately 64,000 versus 124,000. The bears retain a substantial advantage, which has been growing over time. Previously, bearish dominance was beyond question, but this is now less clear, as the news background has changed in recent months.
The bearish trend in the pound is still not considered the most likely scenario. However, developments in the near term will depend on Trump's trade policy, the monetary policies of the Fed and the Bank of England, as well as the duration, scale, and consequences of the conflict in the Middle East. In recent months, the market has shifted its focus toward peace, but negotiations between Iran and the United States remain extremely difficult. Whether Washington and Tehran will ultimately reach an agreement remains an open question. Any deterioration in the geopolitical situation could once again boost demand for the US dollar.
News Calendar for the US and the UK
- United Kingdom – Speech by Bank of England Governor Andrew Bailey (17:30 UTC).
The economic calendar for November 9 contains no particularly significant events. The impact of the economic news background on market sentiment is expected to be limited on Monday.
GBP/USD Forecast and Trading Advice
Short positions in the pair were possible following a rejection from the 1.3454–1.3469 level on the hourly chart, with targets at 1.3404 and 1.3342. Both targets were reached. Long positions were possible following a rebound from 1.3342, with a target at 1.3454–1.3469. Existing positions can remain open today.
The Fibonacci retracement 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.
