On the hourly chart, the GBP/USD pair on Tuesday rebounded from the 127.2% retracement level at 1.3258 (yellow dashed line), reversed in favor of the British pound, and began a new upward movement toward the resistance zone of 1.3357–1.3371. A consolidation of the pair below the 1.3258 level would favor the U.S. dollar and a potential decline toward the support zone of 1.3114–1.3139.

The latest upward wave broke through the highs of the previous two waves, but the last downward wave also broke all previous lows. Thus, the trend can still be considered bearish, although the news background has played a significant role in shaping it. If the news background soon turns against the bears (as it started to on Friday), we may see an equally strong upward wave, and the trend could become bullish again. The situation remains ambiguous and largely dependent on upcoming news.

The news background on Tuesday provided slight support to the bulls, but overall, market participants are in no rush to open new positions. There are few economic events this week, making the Bank of England's meeting the only significant upcoming event. I wouldn't call this a routine meeting, as many analysts are currently questioning a potential rate cut, even though forecasts support such a decision by the MPC. This uncertainty likely explains the current low trading activity — traders are unsure of what to expect from the British regulator. If the MPC decides to lower the interest rate to 4%, the bears could launch a new attack. However, in my view, their recent attempt has already run its course. Bulls are more likely to dominate going forward. That said, from a wave perspective, the trend remains bearish. The news background is open to interpretation, and one should never place full confidence in a single scenario.

On the 4-hour chart, the pair reversed in favor of the British pound following a bullish divergence on the CCI indicator and a series of weak U.S. reports. As a result, further growth in quotes may continue toward the resistance zone of 1.3378–1.3435. No new emerging divergences are currently visible on any indicators. A rebound from the 1.3378–1.3435 zone would favor the U.S. dollar and a resumption of the decline toward the 76.4% Fibonacci level at 1.3118.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category turned bearish in the latest reporting week. The number of long positions held by speculators decreased by 5,961, while the number of short positions increased by 6,637. However, the sharp drop in interest toward the British pound, according to COT data, doesn't fully reflect the real market picture, as demand for the dollar also fell sharply on Friday. The gap between long and short positions now stands at approximately 87,000 vs. 100,000.

In my view, the pound still faces downward risks. The news background during the first half of the year was extremely unfavorable for the U.S. dollar, but it is gradually shifting in a more positive direction. Trade tensions are easing, major agreements are being signed, and the U.S. economy is expected to recover in the second quarter, supported by tariffs and various types of domestic investments. At the same time, the outlook for Fed monetary easing in the second half of the year may exert some pressure on the dollar.

News Calendar for the U.S. and the U.K.:

On Wednesday, the economic calendar contains no notable entries. Therefore, the news background is unlikely to influence market sentiment today.

GBP/USD Forecast and Trading Advice:

Selling the pair is possible today if it closes below the 1.3258 level on the hourly chart, targeting 1.3114–1.3139. For buying opportunities, a rebound from the 1.3114–1.3139 zone was required — which we observed on both Friday and Monday. These buy trades can remain open with a target of 1.3357–1.3371, unless the pair closes below 1.3258.

Fibonacci level grids are built between 1.3371–1.3787 on the hourly chart and between 1.3431–1.2104 on the 4-hour chart.