On the hourly chart, GBP/USD attempted to consolidate above the 1.2931 level on Friday, but bulls failed to hold their ground. A rebound from this level could signal a reversal in favor of the U.S. dollar, leading to a decline toward the 100.0% Fibonacci retracement level at 1.2810. Conversely, closing above 1.2931 would increase the likelihood of further growth toward the next corrective level of 127.2% at 1.3003.

The wave pattern is clear. The last completed downward wave did not break the previous low, while the last upward wave broke the previous peak. This suggests that the bullish trend remains intact. The British pound has shown strong growth recently, arguably too strong given that the fundamental backdrop has not been particularly supportive.

On Friday, the news flow favored bulls, yet their momentum is not limitless. The Nonfarm Payrolls (NFP) report and U.S. unemployment rate data pressured the dollar, allowing for further depreciation. However, by the end of the week, the dollar stabilized, avoiding another sharp decline.

This week, the U.S. inflation report will be crucial for the dollar. However, Donald Trump remains the key factor behind the dollar's weakness in recent weeks. I believe the dollar is falling not just because the Federal Reserve might cut rates more than expected but because traders anticipate a significant economic slowdown in the U.S. due to escalating trade wars initiated by Trump.

On Friday, Jerome Powell acknowledged that economic risks have increased, but he emphasized the need for concrete evidence of a slowdown before adjusting monetary policy. It remains unclear how inflation will react to trade tensions, but price stability remains the Fed's top priority. Future FOMC actions are uncertain, but an economic slowdown in the U.S. seems highly probable.

On the 4-hour chart, GBP/USD continues its upward movement, consolidating above the 50.0% Fibonacci level at 1.2861, which suggests a potential continuation toward the next retracement level of 38.2% at 1.2994. I do not anticipate a sharp decline in the British pound unless the pair breaks below the upward channel.

Additionally, the CCI indicator has formed a bearish divergence, signaling potential downside risks. A close below 1.2861 could trigger a moderate correction in the pound.

Commitments of Traders (COT) Report

The latest COT report shows that the "Non-commercial" category of traders has become less bearish. Long positions increased by 7,777 and short positions decreased by 6,334. This shift means that bears have lost their previous market advantage, with the gap between long and short contracts now at 82,000 vs. 63,000, favoring the bulls.

I still see downward potential for the pound, but recent developments could trigger a long-term shift in sentiment. Over the past three months, long positions have fallen from 98,000 to 81,000 and short positions have declined from 78,000 to 63,000.

If market sentiment toward the U.S. economy deteriorates due to Trump's policies, traders may hesitate to buy the dollar and sell the pound.

U.K. and U.S. Economic Calendar:

There are no significant economic events scheduled for Monday, meaning fundamental factors will have little influence on market sentiment today.

Trading Recommendations for GBP/USD:

Short positions can be considered if the pair rebounds from 1.2931 on the hourly chart, with a downside target at 1.2810. Long positions were viable upon closing above the 1.2788–1.2801 range, targeting 1.2931. Since this level has already been reached, closing above 1.2931 could extend gains toward 1.3003.

Fibonacci retracement levels:

• Hourly chart: Based on the 1.2809–1.2100 range.
• 4-hour chart: Based on the 1.2299–1.3432 range.