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Good day, dear traders! On the hourly chart, on Wednesday, the GBP/USD pair reversed in favor of the British pound and consolidated above the 161.8% Fibonacci retracement level at 1.3520. This opens the path for further growth toward the resistance zone of 1.3611–1.3620. A rebound from this zone will work in favor of the US dollar and lead to a slight decline toward 1.3520. Consolidation above the 1.3611–1.3620 zone will increase the likelihood of continued growth toward the next Fibonacci level at 200.0% – 1.3715.
Wave Analysis
The wave pattern indicates that the bullish trend remains intact. The last upward wave broke the previous high, while the last downward wave failed to breach the previous low. Bulls may find it difficult to count on further gains without new announcements from Donald Trump about introducing or increasing import tariffs. However, the US President remains ready to raise tariffs, confront immigrants, and pressure China. Thus, bulls have reasons for new attacks, but fresh catalysts are needed. A bearish trend would be confirmed only if the pair closes below 1.3425.
On Tuesday, UK labor market data (unemployment and wages) disappointed the bulls. However, the disappointment was short-lived because the US news background is significantly worse. So, no matter how poor things are in the UK, the US dollar still fails to gain ground. The unemployment rate in the UK rose, and the number of new jobless claims tripled traders' expectations. Nevertheless, the pound only dropped by 75 pips on this news, which it easily recovered on Wednesday following the US inflation report.
On Thursday, April's GDP came in at -0.3% MoM versus a forecast of -0.1%. Industrial production volumes fell by 0.6% MoM versus an expected -0.5%. Thus, the pound again has legitimate reasons to decline, but we may only see weak bearish attempts today, which could quickly fade, giving way to bullish momentum once more.
H4 Chart Outlook
On the 4-hour chart, the pair consolidated above the 100.0% Fibonacci level at 1.3435 and rebounded from it from above. The growth process could resume toward the next correction level of 127.2% – 1.3795 after another rebound from 1.3435 or without it. The bullish trend remains clear and uncontested, but a close below 1.3435 would signal a reversal toward the 76.4% level at 1.3118. No emerging divergences are observed in any indicators.
Commitments of Traders (COT) Report
The sentiment of the "Non-commercial" trader category did not change significantly in the latest reporting week. The number of long positions increased by 1,281, and short positions increased by 1,445. Bears have long since lost their advantage in the market. The gap between long and short positions now stands at 35,000 in favor of the bulls: 103,000 vs. 68,000.
The pound still faces downside risks, but recent events have turned the market in a long-term bullish direction. Over the past three months, long contracts have increased from 65,000 to 103,000, while short positions have decreased from 76,000 to 68,000. Under Donald Trump, confidence in the US dollar has weakened, and the COT reports show that traders are not eager to buy it. Thus, regardless of the overall news background, the dollar continues to fall amid Trump-related developments.
News Calendar for the US and UK:
The economic calendar contains four entries on Thursday, two of which have already been released. The remaining news is expected to have a weak impact on market sentiment.
Fibonacci Grids:
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