On the hourly chart, the GBP/USD pair executed a new reversal in favor of the British on Friday, returning to the Fibonacci level of 38.2%–1.2477. This level forms a resistance zone with a level of 1.2513, from which a rebound occurred last week. The second rebound in a row will again favor the US currency, initiating a new decline towards the corrective level of 23.6%–1.2321. Consolidation above the zone will increase the likelihood of continued growth towards the next corrective level of 50.0%–1.2603.
The wave situation last week became simpler and clearer. Waves still have a fairly large size, adding inconvenience to trading. However, the trend is currently "bullish," and its completion requires the absence of a breakthrough of the zone 1.2477–1.2513 or a breakthrough of the last low. In this case, there will be signs of the pair transitioning to a "bearish" trend, which, in my opinion, is more justified after a fairly strong rise.
On Friday, bull traders pretended not to notice another weak report from the UK. Retail trade volumes decreased by 0.3% month-on-month, although growth was expected. Bears only briefly took the initiative but immediately retreated under the pressure of bulls, who had no compelling reasons for new purchases but accomplished the task even without them. I cannot say how justified the British movement was on Friday, as one should remember the good inflation report in the UK last week, which makes further rate hikes by the Bank of England impractical. Bears have reasons to attack but are currently refraining from doing so for various reasons. Perhaps they are waiting for more attractive selling prices.
On the 4-hour chart, the pair executed a reversal in favor of the pound and a new consolidation above the level of 1.2450. Thus, the growth process can be continued towards the next level of 1.2620, but I would like to remind you of the existence of the zone 1.2477–1.2513 on the hourly chart, from which a rebound is quite probable. There are no imminent divergences observed in any of the indicators today. The ascending trend corridor characterizes the traders' sentiment as "bullish."
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category for the last report is slightly less "bearish." The number of long contracts held by speculators decreased by 6180 units, and the number of short contracts decreased by 10,299. The overall sentiment of major players has long changed to "bearish," and the gap between the number of long and short contracts is increasing, but now in the other direction: 57,000 versus 74,000. The British pound still has excellent prospects to continue falling. I still do not expect a strong rise in the British pound soon. Over time, bulls will continue to get rid of buy positions, as is the case with the euro. The recent rise we have seen in the past few weeks is corrective.
News Calendar for the US and the UK:
On Monday, the economic events calendar contains a few interesting entries. The influence of the information background on the market sentiment for the remaining part of the day may be absent.
Forecast for GBP/USD and Trader Tips:
I recommended selling the British pound on a rebound from 1.2477 on the hourly chart with targets of 1.2321 and 1.2250. This advice remains relevant this week. I advise buying the pair upon consolidation above the level of 1.2513 with targets of 1.2603 and 1.2620.