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On the hourly chart, the GBP/USD pair continued its upward move on Monday toward the 100.0% retracement level at 1.3556. It failed to reach this level, so no signal was formed. Today, a rebound from 1.3556 would favor the U.S. dollar and some decline toward the 1.3526 and 1.3489 levels. Consolidation above 1.3556 would allow traders to expect further growth toward the 1.3633–1.3641 resistance level.
The market situation remains "bullish." The latest completed upward wave broke above the previous peak, while the latest downward wave has not yet broken below the previous low. Thus, the bulls currently have the initiative in the market, and their advantage remains intact. The "bullish" trend can be considered broken only after the low of the latest completed wave is breached—that is, below 1.3414—or after two downward waves have formed.
There was no information backdrop for the pound or the U.S. dollar on Monday. Thus, traders lacked both support and guidance throughout the day. Today, the information backdrop will again be extremely weak—almost nonexistent. I do not believe that the weekly ADP report will have any meaningful impact on trader sentiment, given that traders were not particularly impressed by the strong Nonfarm Payrolls report last Friday. The weekly ADP report is several times weaker than Nonfarm Payrolls. Thus, everything suggests that the market will remain in wait-and-see mode. Minimal movements are possible, but they will indeed be minimal. The first important event of the week—the ECB meeting—will take place on Thursday, but even this event has only an indirect connection to the pound and the U.S. dollar. Thus, in the current situation, traders can only wait for market activity to return. In my view, the "bearish" wave is complete, but everything will be decided on Friday, when the United States releases its August inflation report.
On the 4-hour chart, the GBP/USD pair rebounded from the 1.3467–1.3482 support level and rose to the 23.6% retracement level at 1.3538. A rebound from this level would allow for some decline toward the 1.3467–1.3482 level. Consolidation above 1.3638 would allow for further growth toward the 0.0% retracement level at 1.3657. No impending divergences are currently observed 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 decreased by 8,226, while the number of Short positions decreased by 3,175. The current gap between the numbers of Long and Short positions is essentially as follows: 85,000 versus 135,000. The gap and the bears' advantage are gradually narrowing, but the bears still retain a substantial advantage. Previously, the bears' dominance was unquestionable, but now it is, because the information backdrop has changed.
I still do not believe in a "bearish" trend for the pound, but in the near term everything 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 war in the Middle East. In recent months, the market has shifted its expectations toward peace, but negotiations between Iran and the United States failed before they had properly begun. And there is no guarantee that they will resume anytime soon. The Fed's monetary policy stance remains contradictory.
News calendar for the United States and the United Kingdom:
The September 8 economic calendar contains one entry of little interest. The impact of the economic backdrop on market sentiment on Tuesday will be absent or extremely weak.
GBP/USD Forecast and Trading Tips:
Short positions in the pair are possible today following a rebound from 1.3556 on the hourly chart, with targets at 1.3526 and 1.3489. Long positions were possible following a rebound from 1.3489, with targets at 1.3556 and 1.3633. These trades can remain open today.
The Fibonacci levels are drawn at 1.3557–1.3272 on the hourly chart and at 1.3158–1.3655 on the 4-hour chart.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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