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On the hourly chart, the GBP/USD pair on Thursday rebounded from the 76.4% retracement level – 1.3482, which allows it to continue rising toward the 100.0% Fibonacci level – 1.3586. A new rebound from this level will increase the likelihood of further growth. A close below 1.3482 would signal the current weakness of the bulls and a decline of the pound to the support zone of 1.3416–1.3425. In this case, I would conclude that the pound is moving into a sideways range.
The wave situation remains "bearish," strange as it may sound after the rather strong growth of recent weeks. The last completed upward wave did not break the high of the previous wave, and the last downward wave did not break the previous low. The news background played a major role in shaping the very waves we have seen recently. In my view, the news background has already turned the pair toward the bulls, so the trend may soon become "bullish" again.
On Thursday, the only relevant news was the U.S. GDP report. The American economy grew more strongly in the second quarter than expected, but that is only one positive point for the dollar among many negatives. Recall that this week the standoff between the Fed and Donald Trump continued, and in the near future the U.S. president may also "target" other FOMC members. In my view, these developments not only jeopardize the Fed's independence in monetary policy decisions but also severely undermine trust in the U.S. regulator—and therefore in the U.S. dollar as well. Thus, the absence of a sharp decline in the U.S. currency right now does not mean to me that the dollar should not, cannot, or will not fall further. Next week, there will be many more important economic data releases, so traders' activity may increase significantly. The most interesting events appear to be scheduled for September.
On the 4-hour chart, the pair made a second reversal in favor of the pound after rebounding from the support zone of 1.3378–1.3435. Thus, the upward process may continue toward the next retracement level of 127.2% – 1.3795. No emerging divergences are observed today on any indicator. A close below the 1.3378–1.3435 zone will again favor the dollar and some decline toward the 76.4% Fibonacci level – 1.3118.
Commitments of Traders (COT) Report:
Sentiment of the "Non-commercial" category of traders became more "bullish" over the last reporting week. The number of long positions held by speculators increased by 7,567, while the number of shorts decreased by 6,341. The gap between longs and shorts is currently roughly as follows: 81 thousand versus 106 thousand. But as we can see, the pound is more inclined toward growth, and traders toward buying.
In my view, the pound still faces downward potential. The news background for the U.S. dollar during the first six months of the year was disastrous, but it is slowly starting to shift in a positive direction. Trade tensions are easing, key agreements are being signed, and the U.S. economy in the second quarter will recover thanks to tariffs and various types of investment in the U.S. At the same time, expectations of Fed monetary policy easing in the second half of the year have already begun to create significant pressure on the dollar. Thus, I still see no reason for a "dollar trend."
News calendar for the U.S. and U.K.:
The August 29 economic calendar contains two entries of medium importance. The impact of the news background on market sentiment on Friday may be weak and occur only in the second half of the day.
GBP/USD forecast and trader tips:
Sales of the pair were possible after a rebound from 1.3482 with a target of 1.3416–1.3425. This target was reached. For buying, a rebound from the 1.3416–1.3425 zone with a target of 1.3586 was required. These trades can now be kept open until a close below 1.3482.
Fibonacci grids are built from 1.3586–1.3139 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.
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