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The wave situation has transformed into a "bullish" one. The last completed wave downward did not break the previous low, and the new upward wave easily broke the previous peak. Thus, the current trend is "bullish." The news background for the pound has been weak in recent weeks, but the bears have fully priced it in, while the U.S. news background also leaves much to be desired. It will be difficult for the bulls to continue their attacks, but their positions are currently stronger than those of the bears.
Friday's news background did not inspire most traders to trade actively. Out of three U.S. reports, only the Michigan Consumer Sentiment Index produced a reading worth reacting to. The index rose in December from 51.0 to 53.3, which most traders did not expect. However, the dollar's rise on this report turned out to be negligible. Today, moderate growth of the U.S. dollar may continue, but it now faces a threat coming from the FOMC. Already on Wednesday, monetary policy parameters may become softer, as there are still no signs of recovery in the U.S. labor market—despite two rounds of interest-rate cuts. Thus, dollar strengthening on Monday and Tuesday should not be misleading. As early as Wednesday, the bulls may launch a new offensive, and the current trend is "bullish." If the labor market situation does not change in December, the Fed will have to continue lowering interest rates in early 2026—to Donald Trump's delight and to the dollar's misfortune.
On the 4-hour chart, the pair consolidated above the downward trend channel, above the 1.3118–1.3140 level, and rose toward the level of 1.3339. A rebound from this level will work in favor of the U.S. dollar and a decline toward 1.3140. A consolidation above 1.3339 would allow us to expect further growth toward the 100.0% Fibonacci level at 1.3435. No new emerging divergences are observed today.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" category became less bullish during the most recent reporting week, but that reporting week was one and a half months ago—October 28. The number of long positions held by speculators increased by 7,052, and the number of short positions increased by 10,539. The current gap is approximately 82 thousand long positions versus 102 thousand short positions. However, these figures are from mid-October; the picture may now be entirely different.
In my view, the pound still looks less "dangerous" than the dollar. In the short term, the U.S. currency is in demand on the market, but I believe this is temporary. Donald Trump's policies have led to a sharp deterioration in the labor market, and the Fed is forced to ease monetary policy to stop the rise in unemployment and stimulate job creation. Thus, if the Bank of England may cut the rate one more time, the FOMC may continue easing throughout 2026. The dollar significantly weakened in 2025, and 2026 may be no better for it.
News calendar for the U.S. and the UK:
On December 8, the economic calendar contains no notable entries. The news background will not influence market sentiment on Monday.
GBP/USD forecast and trader recommendations:
Today, short positions may be considered on a rebound from the resistance level of 1.3352–1.3362 on the hourly chart, with a target of 1.3294. Long positions could have been opened on a rebound from the 1.3186–1.3214 level on the hourly chart, with targets at 1.3294 and 1.3352. Both targets have been reached. New longs may be opened upon a close above 1.3352–1.3362, targeting 1.3425.
The Fibonacci grids are built from 1.3470 to 1.3010 on the hourly chart and from 1.3431 to 1.2104 on the 4-hour chart.
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