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On the hourly chart, the GBP/USD pair traded sideways on Thursday but overall continues its upward movement. On Friday, the pair achieved a new consolidation above the minor resistance level at 1.3425, which opens the path toward the next Fibonacci target of 161.8% at 1.3520. However, this growth is unlikely to be rapid.
The wave structure has become more complex, yet still comprehensible. The latest upward wave broke the previous high, while the last completed downward wave failed to break the previous low. This confirms that the former "bearish" trend has transformed into a "bullish" one. Bulls struggle to break above 1.3425 without new headlines from Donald Trump regarding tariffs, but bears have shown only weakness and passivity in recent weeks. The news background continues to offer modest support to the bulls.
Thursday's news background was better for the pound than for the euro. While the manufacturing PMI declined, the services PMI rose above the 50.0 level, which is a positive signal. In the U.S., both PMIs showed strong growth, but traders chose to ignore them—or at least, we saw no noticeable strengthening of the dollar. This morning in the UK, retail sales data showed a monthly increase of 1.2% and a year-on-year rise of 5.0%, both exceeding expectations. Thus, the pound and the bulls once again find support from the news. Earlier this week, UK inflation data revealed a sharp jump, suggesting that the Bank of England will likely pause its monetary easing—positive news for the pound.
As for the dollar, all it can do now is hope for a miracle. Traders have largely ignored the Fed's prolonged rate pause, as well as strong U.S. economic data.
On the 4-hour chart, the pair has returned to the 100.0% Fibonacci level at 1.3435. Another rejection from this level would favor the U.S. dollar and may lead to a decline toward 1.3118. A consolidation above 1.3435 would open the way for continued growth toward the next Fibonacci level of 127.2% at 1.3794. No emerging divergences are observed on any indicators today.
Commitments of Traders (COT) Report:
Sentiment among the "Non-commercial" trader category became slightly less bullish in the last reporting week. The number of long positions held by speculators fell by 4,844, while short positions decreased by 2,825. Bears have long since lost their market advantage. The gap between long and short positions now stands at 27,000 in favor of the bulls: 89,000 versus 62,000.
In my view, the pound still faces medium-term downside risks, but recent events could cause a long-term market shift. Over the past three months, long positions have risen from 65,000 to 92,000, while shorts have dropped from 76,000 to 62,000. Under Donald Trump, confidence in the dollar has declined, and COT data shows little appetite among traders to buy the greenback.
News Calendar for the U.S. and UK:
United Kingdom – Retail Sales (06:00 UTC)
The Friday economic calendar includes just one key release, which has already been published. For the rest of the day, the informational backdrop is unlikely to influence trader sentiment significantly.
GBP/USD Forecast and Trading Tips:
Selling the pair is possible today on a rejection from the 1.3435 level on the 4-hour chart, with targets at 1.3344–1.3357 and 1.3205. Buying was previously viable on a close above the 1.3344–1.3357 zone, with a target at 1.3425. That target has now been reached. New long positions are possible on a 4-hour close above 1.3435.
Fibonacci grids are drawn from 1.3205–1.2695 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.
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