On the hourly chart, GBP/USD fell to the 76.4% retracement level at 1.3489 on Thursday, rebounded from it, and returned to the 1.3526 level on Friday. Thus, the upward move may continue today toward the 100.0% Fibonacci level at 1.3556. A rebound from 1.3526 would favor the US currency and a resumption of the decline toward 1.3489 and 1.3454.
The market situation remains "bullish." The latest completed downward wave did not break the previous low, while the new upward wave has not yet broken the previous peak. Thus, the bulls currently control the market, and their advantage remains intact. The "bullish" trend can be considered broken only after the low of the latest completed wave is breached, that is, below 1.3473.
Traders' attention was focused on the ECB meeting on Thursday, but there were other interesting developments as well. In particular, the US Producer Price Index accelerated slightly more than traders had expected. In August, it came in at 5.4% year-on-year, compared with a forecast of 5.3% year-on-year. Thus, there is every reason to believe that the Consumer Price Index will also accelerate slightly in August. Is this good for the dollar? Yes, because the FOMC will move even closer to tightening monetary policy next Wednesday. At present, bearish traders have not rushed into action, and the market remains in a wait-and-see mode as it awaits the inflation report, which will be released today. In the morning, traders received data on UK GDP and industrial production, which allowed the bulls to recover all of yesterday's losses. GDP grew by 0.4% in July, compared with expectations of 0%, while industrial production increased by 0.6%, against a forecast of +0.2%. Thus, the bulls took control in the first half of the day, but everything may change in the second half.
On the 4-hour chart, GBP/USD reversed in favor of the US dollar and consolidated below the 23.6% retracement level at 1.3538. However, whether the bears will continue their attacks will be determined today and will depend on the news background. A new consolidation above 1.3538 would allow for a resumption of the upward move toward the 0.0% retracement level at 1.3657. No emerging divergences are currently observed in any of the indicators.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category became less "bearish" over the latest reporting week. The number of Long positions held by speculators decreased by 8,226, while the number of Short positions decreased by 3,175. The current gap between the numbers of Long and Short positions is effectively as follows: 85,000 versus 135,000. The gap and the bears' advantage are gradually narrowing, although the bears still maintain a substantial advantage. Previously, the bears' dominance was unquestionable, but this is now less clear because the news background has changed.
I still do not believe in a "bearish" trend for the pound, but in the near term, everything will depend on Trump's trade policy, the monetary policy of the Federal Reserve and the Bank of England, as well as the duration, scale, and consequences of the war in the Middle East. In recent months, the market has adjusted its expectations toward peace, but negotiations between Iran and the United States failed without really getting started. And there is no guarantee that they will resume anytime soon. The Federal Reserve's position on monetary policy remains contradictory.
News calendar for the United States and the United Kingdom:
The September 11 economic calendar contains four entries, among which I would highlight US inflation, which currently has a very strong influence on traders' sentiment. The impact of the economic background on market sentiment on Friday may be strong.
GBP/USD forecast and trading advice:
Selling the pair was possible following a rebound from 1.3556 on the hourly chart, with targets at 1.3526 and 1.3489. Both targets were reached. Buying was possible following a rebound from 1.3489, with targets at 1.3526 and 1.3556. The first target was reached.
The Fibonacci grids are drawn from 1.3557 to 1.3272 on the hourly chart and from 1.3158 to 1.3655 on the 4-hour chart.
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