On the hourly chart, the GBP/USD pair reversed in favor of the US dollar on Thursday, returning to the support zone of 1.2690–1.2705. A bounce from this level will favor the pound and resume its growth towards the resistance zone of 1.2788–1.2801. Securing the pair below the 1.2690–1.2705 zone will increase the likelihood of a long-awaited decline towards 1.2611. Currently, the bears remain extremely weak.

The wave situation remains unchanged. The last downward wave ended on May 9 without breaking the low of the previous wave, while the new upward wave broke the peak of May 3. Thus, the GBP/USD pair trend has changed to "bullish" and remains so. However, the bullish trend might be short-lived as the current information background is not strong enough for the pound to see several upward waves. Nevertheless, the first sign of the end of the bullish trend will appear only when a new downward wave breaks the low of the previous wave from May 9. For this to happen, the pound must fall 320-340 points from the current price.

The pound continues to rise almost without interruption. During periods when the bulls take a break, there are no movements. This morning, a retail sales report was released in the UK, showing a 2.3% decrease against a forecast of -0.4%. The result could have triggered pound sell-offs for an hour or two, but nothing happened. Yesterday, the business activity indices in the UK were quite mediocre, while the US indices were impressive. Yet, the bears couldn't break through the 1.2690–1.2705 zone. Therefore, the bears are currently so weak that even a supportive information background for the dollar doesn't help them. The dollar's prospects remain bleak.

On the 4-hour chart, the pair rose to the corrective level of 1.2745 and bounced off it. A bounce from the 1.2745 level suggests some decline towards the 1.2620 level. Securing the pair above the 1.2745 level will give even more confidence to bullish traders, who may continue to target the 1.3044 level. Today, there are no emerging divergences in any indicator. On the hourly chart, the pair's decline is held back by the 1.2690–1.2705 zone.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" category of traders became less "bearish" in the last reporting week. The number of Long contracts held by speculators decreased by 3,103, while the number of Short contracts decreased by 4,841. The overall sentiment of major players has shifted, and now the bears dictate the market conditions. The gap between the long and short contracts is 20 thousand: 48 thousand versus 68 thousand.

The pound still has prospects for decline. Over the past three months, the number of Long positions decreased from 83 thousand to 48 thousand, while the number of Short positions increased from 49 thousand to 68 thousand. Over time, the bulls will continue to liquidate Buy positions or increase Sell positions, as all possible factors for buying the pound have already been realized. The bears have shown their weakness and complete unwillingness to go on the offensive in recent months, but I still expect the pound to start falling.

News Calendar for the USA and the UK:

UK – Retail Sales Volume Change (06:00 UTC).

USA – Durable Goods Orders Change (12:30 UTC).

USA – University of Michigan Consumer Sentiment Index (12:30 UTC).

Friday's economic event calendar contains three entries, one of which has already been released to traders. The impact of the information background on market sentiment for the rest of the day may be moderate.

GBP/USD Forecast and Trading Tips:

Selling the pound is possible if there is a bounce from the resistance zone on the hourly chart at 1.2788–1.2801 with targets at 1.2690–1.2705. It is also possible to sell if the pair closes below the 1.2690–1.2705 zone with a target of 1.2611. Buying can be considered if there is a new bounce from the 1.2690–1.2705 zone with targets at 1.2788–1.2801.