On the hourly chart, GBP/USD reversed in favor of the pound below the 1.2363 – 1.2370 support zone and started a new upward movement toward the 1.2488 – 1.2508 resistance zone. Unfortunately, there was no rebound from the 1.2363 – 1.2370 zone, which would have provided a strong buy signal. Bulls may also struggle to reach the 1.2488 – 1.2508 zone today, making another decline in the pound highly likely. The bearish trend is weakening.

The current wave structure is clear. The last completed downward wave failed to break the previous low, while the last completed upward wave exceeded the previous peak. This suggests a continued bullish trend, but wave sizes have varied significantly in recent weeks. There is no strong confidence that the bullish trend will persist for another couple of weeks.

Monday and Tuesday had weak market catalysts, but today brings high-impact data. At 13:30 UTC, the U.S. CPI (Consumer Price Index) report for January will be released. While forecasts are neutral, actual core and headline inflation figures could significantly impact trader sentiment.

Just yesterday, Powell announced that rate cuts will be possible only if inflation declines faster and more significantly. If inflation remains elevated, the Fed will likely maintain its current monetary policy stance for longer. Therefore, inflation values above forecasts should support bears, and below forecasts should support bulls. Traders should prepare for increased volatility in the second half of the day.

On the 4-hour chart, the GBP/USD continues to trade sideways between 1.2299 and 1.2565. Sideways movement is becoming more evident, making the hourly chart more relevant for trading decisions. No divergence signals detected on any indicator today.

Commitments of Traders (COT) Report:

The mood of the "Non-commercial" category of traders has become less "bearish" over the last reporting week. The number of long positions in the hands of speculators increased by 6,111, while the number of short positions decreased by 4,238. The bulls lost any advantage in the market, and in total this process lasted for several months. The gap between the number of long and short positions remains in favor of the bears: 65,000 versus 76,000.

In my opinion, the British dollar still faces the prospects of falling, and COT reports signal a strengthening of the bears' positions almost every week. Over the past 3 months, the number of Long contracts has decreased from 120,000 to 65, while the number of Short contracts has increased from 75,000 to 76. I believe that over time, professional players will continue to get rid of long positions or increase short positions, as all possible factors for buying the British pound have already been worked out. Graphical analysis currently signals growth, but there should also be corrections.

News calendar for USA and UK:

USA – Consumer Price Index (13-30 UTC).

USA – Speech by FOMC President Jerome Powell (15-00 UTC).

On Wednesday, the calendar of economic events contains two rather important entries. The influence of the information background on the mood of traders today may be quite strong, but in the afternoon.

GBP/USD forecast and tips for traders:

Sales of the pair are possible today with a rebound from the 1.2488–1.2508 zone with a target of 1.2363–1.2370 on the hourly chart. Purchases were possible yesterday when consolidating above the 1.2363–1.2370 zone on the hourly chart with a target of 1.2488–1.2508. I doubt that the target will be fulfilled, so it's better to close the purchases or secure the deal with a Stop Loss.

The Fibonacci level grids are based on 1.3000–1.3432 on the hourly chart and 1.2299–1.3432 on the 4-hour chart.