On the hourly chart, GBP/USD continued to trade near the 1.3633–1.3641 level on Monday. After three days, it is difficult to say what traders are planning to do next. There has been no clear consolidation either above or below the indicated zone. Thus, the market has reached a state of complete equilibrium, and for now neither the bulls nor the bears are ready to disrupt it.

The market situation remains "bullish." The latest completed downward wave did not break the previous low, while the latest upward wave (which is not yet complete) broke the previous high. Thus, the bulls currently have the initiative in the market, and their advantage is strengthening with each passing day. The "bullish" trend can be considered broken only after the low of the latest completed wave is broken, i.e. below 1.3414, or after two downward waves are formed.

There was no significant fundamental backdrop on Monday, so the market continues to take a break after the weekend. In general, no one wants to take risks right now, as no one understands how events will unfold from here. Kevin Warsh is scheduled to speak this Friday, and what position will he take this time? Based on the latest economic data on the labor market and inflation, it is extremely unlikely that the Fed will decide to tighten monetary policy in September. It remains unclear how events in the Middle East will develop, while these very events will affect oil prices, inflation, and monetary policy. Thus, the best course of action for traders now is to wait for news and respond to developments in the world as they unfold. We can see that there have been no interesting market movements at the beginning of the week, so all that remains is to wait. Perhaps even for a long time. Today marks the beginning of the final phase of Donald Trump's operation to disarm Iran, which has already lasted six months. Trump now wants to destroy Iran economically, while traders still have little understanding of what this will look like in practice. The U.S. president is calling on all countries to stop cooperating with Tehran, but it is also unclear whether anyone will heed the U.S. president's calls.

On the 4-hour chart, GBP/USD rose to the 0.0% retracement level at 1.3657. A rebound from this level would favor the U.S. dollar and some decline toward the 23.6% Fibonacci level at 1.3538. Consolidation above 1.3657 would increase the chances of further gains for the pound. No new emerging divergences are currently observed on any of the indicators.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became slightly less "bearish" over the latest reporting week. The number of Long positions held by speculators increased by 12,075, while the number of Short positions increased by 10,427. The gap between the number of Long and Short positions is currently essentially as follows: 77,000 versus 132,000. The gap and the bears' advantage are gradually narrowing, but the bears' advantage nevertheless remains enormous. Previously, the bears' dominance raised no questions, but now it does, as the fundamental backdrop has changed.

I still do not believe in a "bearish" trend for the pound, but in the near future everything will depend on Trump's trade policy, the monetary policies of the Fed 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 in the near future. Meanwhile, FOMC monetary policy is shifting toward abandoning further tightening, which does not add optimism for dollar bulls.

News Calendar for the United States and the United Kingdom:

• U.S. – Weekly ADP employment report (12:15 UTC).
• U.S. – CP Consumer Confidence Index (14:00 UTC).
• U.S. – New Home Sales (14:00 UTC).

On August 25, the economic calendar contains three entries and not a single important one. The impact of the economic backdrop on market sentiment on Tuesday will be extremely weak or nonexistent.

GBP/USD Forecast and Trading Tips:

Selling the pair is possible today if there is consolidation below the 1.3633–1.3641 level on the hourly chart, with a target of 1.3556. Buying is possible if there is consolidation above the 1.3633–1.3641 level, with a target of 1.3731. However, the past few days should be taken into account, as they have not produced any signals.

The Fibonacci level grids are drawn from 1.3557–1.3272 on the hourly chart and from 1.3158–1.3655 on the 4-hour chart.