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On the hourly chart, the GBP/USD pair on Friday rebounded from the support level at 1.3526–1.3539, reversed in favor of the British currency, and rose toward the resistance level at 1.3595–1.3620. A rebound from this zone today would work in favor of the U.S. dollar and the resumption of a decline toward the 1.3526–1.3539 level and the 100.0% Fibonacci retracement level at 1.3470. A consolidation above this zone would increase the probability of continued growth toward the next Fibonacci level of 161.8% at 1.3755.
The wave situation remains "bearish." The last completed upward wave failed to break the previous high, while the most recent downward wave broke the previous low. We have seen two consecutive bearish waves, which was sufficient to signal a trend change. The fundamental background for the British pound has been weak in recent months, but the background in the U.S. is even worse. Bulls are regularly supported by Donald Trump. In recent weeks, bears and bulls have taken turns dominating.
The news background on Friday was very weak, but bullish traders were recovering after Thursday's collapse. Let me remind you that the Bank of England did not decide to ease monetary policy amid rising inflation, but the MPC committee turned out to be more dovish than the market had expected. The difference in opinions was effectively just one vote. Thus, even with high inflation, the British regulator was one step away from cutting rates. This fact displeased traders, who pushed the pound sterling down by another 1 cent. However, on Friday it became clear that monetary policy parameters remained unchanged, which allowed the pound to recover. Overall, the pound is still correlating well with the euro, which is showing growth during Monday morning trading. However, bulls need to overcome the strong resistance level at 1.3595–1.3620. If they fail to do so, the euro will rise in proud isolation.
On the 4-hour chart, the pair rose to the Fibonacci level of 127.2% at 1.3795 and rebounded from it. As a result, a reversal in favor of the U.S. dollar followed, and a decline toward the support level at 1.3369–1.3435 began. A consolidation above the 1.3795 level would allow expectations of continued bullish trend development toward the 1.4020 level. No emerging divergences are observed today.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category became more bullish over the last reporting week. The number of long positions held by speculators increased by 7,107, while the number of short positions increased by 4,856. The gap between long and short positions currently stands at approximately 95,000 versus 108,000 and continues to narrow. Bears have dominated in recent months, but it seems they have exhausted their 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 occasionally enjoy 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 ease monetary policy to curb rising 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 UK:
On February 9, the economic calendar contains no noteworthy events. The impact of the news background on market sentiment on Monday may be absent.
GBP/USD Forecast and Trading Advice:
Selling the pair is possible upon a rebound from the 1.3595–1.3620 level on the hourly chart, with targets at 1.3526–1.3539 and 1.3470. Buy positions could be opened after a rebound from the 1.3526–1.3539 zone on the hourly chart with a target at 1.3595–1.3620. The target has been reached. New buy positions can be considered after a close above the 1.3595–1.3620 level, with a target at 1.3755.
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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