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On the hourly chart, GBP/USD returned to the 100.0% retracement level at 1.3556 on Tuesday. Today, a rebound from the 1.3556 level would favor the US 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 only be considered broken after a break below the low of the latest completed wave, i.e., below 1.3414, or after two downward waves have formed.
The fundamental backdrop was rather weak on Tuesday, but Bank of England Governor Andrew Bailey came to traders' aid. The head of the UK regulator said that he wanted to dispel any market expectations that monetary policy tightening was inevitable, as the Bank of England has no clear plan or trajectory for changes in interest rates. This is not because the central bank is failing to do its job, but because any policy changes depend on incoming economic data and the geopolitical situation in the Middle East. Andrew Bailey made it clear that investors are expecting too large an increase in interest rates, which may not happen. The most likely course of Bank of England policy suggests much less tightening. "I want to say that the Bank of England has no 'secret plan' for interest rates. We respond to what is happening in the world and the economy," Bailey said. It should be noted that the market currently expects one policy tightening before the end of the year and two in 2027. Thus, expectations are hawkish in any case. However, only time, the war in Iran, the Strait of Hormuz, oil prices, and inflation will show whether these expectations are realized.
On the 4-hour chart, GBP/USD rebounded from the 1.3467–1.3482 support level and closed above the 23.6% retracement level at 1.3538, allowing traders to expect further growth toward the 0.0% retracement level at 1.3657. No emerging divergences are currently observed on any indicator. After rebounding from the 1.3467–1.3482 support level and forming a bullish divergence on the CCI indicator, the pound could well return to the 0.0% Fibonacci level.
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 gap between the numbers of Long and Short positions is currently effectively as follows: 85,000 versus 135,000. The gap and the bears' advantage are gradually narrowing, but the bears still maintain a substantial advantage. Previously, the bears' dominance was not in question, but it is now, as the fundamental 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 policy 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 has repositioned itself toward peace, but negotiations between Iran and the United States failed without really getting started. And there is no guarantee that they will resume in the near future. The Fed's position on monetary policy remains contradictory.
News Calendar for the US and UK:
The economic calendar for September 9 contains no interesting releases. The economic backdrop will have no impact on market sentiment on Wednesday.
GBP/USD Forecast and Trading Tips:
Selling the pair is possible today following a rebound from the 1.3556 level on the hourly chart, with targets at 1.3526 and 1.3489. Buying was possible following a rebound from the 1.3489 level, with targets at 1.3556 and 1.3633. The first target was reached. A close above 1.3556 will allow traders to hold positions targeting 1.3633.
The Fibonacci levels are drawn from 1.3557–1.3272 on the hourly chart and from 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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