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On the hourly chart, the GBP/USD pair rebounded on Wednesday from the 1.3437–1.3470 level, around which all trading has been taking place for about a month now. A rebound in quotes from this zone allows for some decline toward the support level of 1.3352–1.3362. Consolidation of the pair above the 1.3437–1.3470 level would work in favor of the pound and growth toward the resistance level of 1.3526–1.3539.
The wave situation remains "bearish." The last completed downward wave broke the previous low, while the new upward wave failed to break the previous peak. The news background for the pound has been weak in recent weeks, but the news background in America has been even worse. Nevertheless, the bears have not yet released the initiative, although over the past couple of days the bulls have been attacking more actively.
The news background on Wednesday could have helped bullish traders, as inflation in the UK unexpectedly accelerated to 3.4%, which sharply reduces the likelihood of further monetary policy easing by the Bank of England at its upcoming meeting. This is a "bullish" factor for the pound, but traders did not take advantage of it. The easing of tensions around Greenland in the second half of the day did the GBP/USD pair a "bearish favor." Today, the final estimate of U.S. GDP for the third quarter will be released. All recent U.S. economic growth reports have turned out better than market expectations, so it cannot be ruled out that forecasts will again be exceeded today. However, I would not advise expecting strong growth in the U.S. currency, as markets have recently been very skeptical about high U.S. GDP figures. This is because the unemployment rate is steadily rising, while labor market indicators are declining. Many in the market do not understand what supports quarterly growth of 3–4% if Americans are experiencing serious difficulties in finding jobs. Still, the pair may show a modest decline from the 1.3437–1.3470 level.
On the 4-hour chart, the pair has returned to the support level of 1.3369–1.3435. A rebound from this zone would once again work in favor of the pound and a resumption of growth toward the next Fibonacci level of 127.2% at 1.3795. Consolidation below the 1.3369–1.3435 level would allow traders to expect a reversal in favor of the U.S. dollar and a decline toward the support level of 1.3118–1.3140. No emerging divergences are observed today.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" category of traders became more "bullish" over the latest reporting week. The number of long positions held by speculators increased by 2,517, while the number of short positions decreased by 2,751. The gap between the number of long and short positions is now effectively as follows: 79,000 versus 104,000, and it is narrowing rapidly. Bears have dominated in recent months, but the pound appears to have already exhausted its downside potential. At the same time, the situation with euro currency contracts is exactly the opposite. I still do not believe in a "bearish" trend for the pound.
In my view, the pound still looks less "dangerous" than the dollar. In the short term, the U.S. currency may enjoy occasional demand in the market, but not in the long term. Donald Trump's policies have led to a sharp deterioration in the labor market, and the Federal Reserve is forced to pursue monetary easing in order to stop the rise in unemployment and stimulate job creation. U.S. military aggression also does not add optimism for dollar bulls.
News Calendar for the U.S. and the United Kingdom:
On January 22, the economic calendar contains four events. The impact of the news background on market sentiment on Thursday may be felt in the second half of the day.
GBP/USD Forecast and Trading Advice:
Selling the pair is possible today after a rebound from the 1.3437–1.3470 level on the hourly chart, with a target at 1.3352–1.3362. Buying positions can be opened upon a close above the 1.3437–1.3470 level, with a target at 1.3526–1.3539.
Fibonacci grids are drawn from 1.3470–1.3010 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.
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