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According to the hourly chart, the GBP/USD pair on Tuesday experienced an increase to the corrective level of 100.0% (1.2447), a rebound from it, and a reversal in favor of the American currency. At the same time, the quotes consolidated above the descending trend corridor, but I can't say that the bears have taken the initiative now. The pair is falling again after the rebound from 1.2447, and it is very close to the nearest level at 1.2342. A rebound from 1.2342 or 1.2295 will favor the British pound and a new rise, but the decline will continue after Loretta Mester's speech yesterday.
Yesterday, the President of the Federal Reserve Bank of Cleveland not only allowed for another interest rate hike but also stated, "We may have to raise interest rates again in June." Specific timeframes have been mentioned, and now it is necessary to gain the support of other FOMC members. And today, we have speeches by Harker, Jefferson, and Bowman. Patrick Harker and Michelle Bowman could support Mester as they are moderate "hawks." The market did not expect the Fed to tighten policy again in June, so this information is unexpected. Such information often triggers new market movements. Thus, the dollar receives additional support. The British pound could have taken the initiative yesterday, but for now, I expect further decline.
Also, this week we have not seen reports on the US labor market, the ISM Manufacturing Index, the unemployment rate, or the Job Openings report. All of this data is important. The dollar and the bears must rely on favorable figures to maintain the current trend. The chances of such an outcome are quite high, much higher than the rise of the euro or the British pound.
On the 4-hour chart, yesterday, the pair rebounded from the level of 1.2441, which allows for the expectation of a resumption of the decline towards the next corrective level of 127.2% (1.2250). The "bearish" divergence on the CCI indicator also allows anticipation of a new decline. A rebound of the pair's rate from the level of 1.2250 will work in favor of the pound, and some growth, while closing below this level, will increase the probability of a decline towards the next level at 1.2008.
Commitments of Traders (COT) report:
The sentiment of the "non-commercial" trader category has become slightly less bullish over the past reporting week. The number of long contracts held by speculators decreased by 8,185 units, and the number of short contracts decreased by 7,181. The overall sentiment of major players remains predominantly bullish (it has been bearish for a long time), but the number of long and short contracts is now almost equal - 69,000 and 57,000, respectively. The British pound has good prospects for a resumption of growth, but the current information background does not favor the dollar or the pound. The pound has been rising for a long time, and the net position of non-commercial traders has been increasing, but it all depends on whether long-term support for the British currency will be maintained. At this time, expecting a resumption of growth is not advisable.
News calendar for the US and the UK:
US - Job Openings and Labor Turnover Survey (JOLTS) (14:00 UTC).
US - Federal Reserve's Beige Book (18:00 UTC).
Wednesday's economic events calendar contains only two entries, and only one may seriously interest traders. The impact of the background information on the pair's movement in the remaining part of the day will be moderate. Still, the pound was already confidently falling after Mester's statements yesterday. Speeches by Harker, Bowman, and Jefferson are scheduled for the second half of the day and can also influence trader sentiment.
Forecast for GBP/USD and trader recommendations:
New pound sales could be opened after the rebound from the 1.2447 level on the hourly chart, with targets at 1.2342 and 1.2295. I currently consider buying the pound after several sell signals and yesterday's news impractical.
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