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On the hourly chart, the GBP/USD pair on Wednesday consolidated above the 1.3526–1.3539 level, which allows it to expect further growth toward the resistance level of 1.3595–1.3620. A consolidation of quotes below the 1.3526–1.3539 level would favor the U.S. dollar and a resumption of the decline toward the support level of 1.3437–1.3470.
The wave situation remains "bearish." The last completed upward wave failed to break the previous peak, while the last downward wave broke the previous low. To shift the trend back to "bullish," a consolidation above the last peak at 1.3730 or two consecutive bullish waves are required. The news background for the pound has been weak in recent months, but the U.S. news background has also rarely truly pleased traders. Recently, the pound has been going through a "black streak," but Donald Trump regularly supports the bulls.
On Wednesday, the news background had no impact on traders' sentiment, as it was simply absent. Today the situation will not be any better, as the market is only awaiting the U.S. initial jobless claims report. However, the third round of negotiations between the United States and Iran is expected to take place in Geneva today, so by the end of the day traders may receive news that could force them to reconsider the strategy of recent weeks. Most of the market currently believes that Trump will fail to force Tehran to halt its nuclear development. Thus, the probability of reaching an agreement between the two countries is extremely low. If a deal cannot be reached, Trump is ready to order numerous strikes on Iran, not ruling out a full-scale military operation to overthrow the current government. In anticipation of these events, the market has been using the dollar as a safe-haven asset, but now the moment of resolution is approaching. Those who feared Trump's military operation have already shifted their assets into the dollar.
On the 4-hour chart, the pair declined to the support level of 1.3369–1.3435, rebounded from it, and reversed in favor of the pound. A growth process has begun, but it remains within the descending trend channel. Therefore, strong growth of the pair can only be expected after consolidation above the corridor. In that case, bullish traders will once again aim for the Fibonacci level of 127.2% at 1.3795. No emerging divergences are observed on any indicators today.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category became slightly less bullish over the last reporting week. The number of long positions held by speculators decreased by 6,358, while the number of short positions increased by 10,236. The gap between long and short positions now effectively stands at 82,000 versus 124,000. In recent months, bears have more often dominated, but the situation with euro contracts is directly the opposite. I still do not believe in a bearish trend for the pound under any circumstances.
In my view, the pound still looks less "dangerous" than the dollar. And that is its main advantage. 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 decline in the labor market, and the Federal Reserve is forced to ease monetary policy to stimulate job creation. U.S. military aggression and the trade war also do not add optimism for dollar bulls.
News Calendar for the U.S. and the U.K.:
U.S. – Change in Initial Jobless Claims (13:30 UTC).
On February 26, the economic calendar contains only one minor entry. The impact of the news background on market sentiment on Thursday will be extremely weak or absent.
GBP/USD Forecast and Trading Tips:
Selling the pair was possible after a rebound from the 1.3526–1.3539 level on the hourly chart with a target of 1.3437–1.3470. The target was reached. Buying was possible after a rebound from the 1.3437–1.3470 level on the hourly chart with a target of 1.3526–1.3539. The target was achieved. The new target is 1.3595–1.3620.
The Fibonacci retracement grids are constructed from 1.3470–1.3010 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.
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