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On the hourly chart, the GBP/USD pair on Monday consolidated below the 1.3419–1.3425 level and continued to decline toward the 1.3387 and 1.3357 levels. At the moment, there are quite a few corrective levels, and they are located close to one another. Therefore, in the coming days, I would not consider taking every trading signal that appears. In my view, the trend has shifted to bullish, so only buy signals deserve attention.
The wave structure also turned bullish almost in a single day. The last completed downward wave broke the previous low, but the most recent upward wave also broke the previous peak. The news background in recent weeks has been negative for the U.S. dollar, but bullish traders had not been taking advantage of the opportunities to advance. Now, they have begun to spread their wings, though they are doing so rather slowly.
On Monday, there was no news background in either the UK or the U.S., just as on Friday. This week, a few reports are expected that deserve attention, but even those may not have much impact on the market, as traders are showing very low activity right now. Today, the news background will also be virtually absent, and the White House statements toward China carry little significance at this stage — it's just more verbal rhetoric, not actual developments. The Federal Reserve has issued no important statements either. In my view, there is essentially no news at all at the moment.
A significant role in creating this information vacuum has been played by the ongoing government shutdown. In recent weeks, trader activity has dropped sharply. I believe this is largely due to the absence of key U.S. economic indicators. In 2025, traders are paying especially close attention to American statistics. As for the shutdown itself, there have been no updates. There is still no indication that Republicans and Democrats are close to an agreement, and the pause has now lasted almost three weeks.
On the four-hour chart, the pair reversed in favor of the pound after forming a bullish divergence on the CCI indicator, and rose toward the 100.0% retracement level at 1.3435. A rebound from this level would allow traders to expect a reversal in favor of the U.S. dollar and some decline toward 1.3339. A break above this level would increase the likelihood of further growth toward the next Fibonacci level of 127.2% – 1.3795. At the moment, no new divergences are forming on any indicators.
Commitments of Traders (COT) Report:
The sentiment of non-commercial traders became more bullish over the past reporting week. The number of long positions held by speculators increased by 3,704, while the number of short positions decreased by 912. The gap between the two now stands at approximately 85,000 longs vs. 86,000 shorts. Bullish traders are once again tipping the scales in their favor.
In my opinion, the pound still faces downside risks, but with each passing month, the U.S. dollar appears weaker and weaker. If earlier traders worried about Donald Trump's protectionist policies, uncertain of their eventual results, now they are more concerned about their consequences — the risk of a recession, the constant introduction of new tariffs, and Trump's conflict with the Federal Reserve, which could lead to the regulator becoming politically controlled by the White House. Thus, the pound currently looks far less vulnerable than the U.S. dollar.
News Calendar for the U.S. and the U.K.:
For October 21, the economic calendar contains no significant entries. The news background will have no influence on market sentiment on Tuesday.
GBP/USD Forecast and Trading Advice:
I cannot recommend selling the pair today, as I believe the trend has shifted to bullish. If the bulls are currently showing low activity, the bears are even weaker. Buying can be considered if the price rebounds from the 1.3354–1.3357 level, with targets at 1.3419–1.3425 and 1.3460.
Fibonacci grids are constructed from 1.3526–1.3247 on the hourly chart and 1.3431–1.2104 on the four-hour chart.
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