On the hourly chart, the GBP/USD pair fell to the 1.3139 level on Monday, rebounded from it, and rose to the 100.0% Fibonacci level at 1.3205. A rebound from this level will support the U.S. dollar and a renewed decline toward the 1.3085 and 1.3139 levels. A close above 1.3205 would allow expectations for a rise in the pound toward 1.3344.

Recently, the wave structure has been straightforward. The last completed upward wave failed to break the previous wave's peak, while the last downward wave broke the previous low. Thus, the "bullish" trend is transforming into a "bearish" one. The pound's decline is not yet strong enough to be called a trend, but over the past three months, even such declines have been rare. Bulls will struggle to push above 1.3425 without new statements from Donald Trump regarding tariff hikes or new import duties.

Monday's news backdrop once again favored the bears. The pound's decline began last week after the Bank of England cut interest rates, the FOMC held rates steady, the U.S. signed its first trade agreement with the UK, and reached a deal with China to reduce import tariffs.

These developments have supported the bears, so it's no surprise they launched a strong offensive. Today's UK unemployment report showed the rate rising to 4.5% in March (above forecasts). Employment rose by only 120,000 (below expectations), while wages rose by 5.5% (above forecasts). Among these, the unemployment figure is the most impactful—and it doesn't favor the pound. Therefore, the decline may continue. However, the bears can only attack with obvious support factors. If this favorable backdrop dries up, the pound's decline may stall indefinitely.

On the 4-hour chart, the pair rebounded from the 100.0% Fibonacci level at 1.3435, turned in favor of the U.S. dollar, and is continuing its decline toward the 76.4% corrective level at 1.3118. No emerging divergences are currently present on any indicators. The ascending trend channel still points to a bullish trend. A bounce from 1.3118 would favor the pound and a potential return to growth toward 1.3435.

Commitments of Traders (COT) Report

The sentiment among the "Non-commercial" category of traders became more bullish in the latest reporting week. The number of long positions rose by 3,320, while short positions decreased by 1,956. Bears have lost their edge. The gap between long and short positions now favors the bulls by 29,000: 94K vs. 65K.

Although downward potential for the pound remains, recent developments may trigger a longer-term market reversal. Over the past three months, long positions have increased from 65K to 94K, while shorts have dropped from 76K to 65K. Under Trump's leadership, faith in the dollar has been shaken, and COT reports show that traders aren't rushing to buy the greenback.

News Calendar for the UK and US

• UK – Unemployment Rate (06:00 UTC)
• UK – Change in Jobless Claims (06:00 UTC)
• UK – Change in Average Earnings (06:00 UTC)
• US – Consumer Price Index (12:30 UTC)

Out of four economic releases scheduled for Tuesday, three have already been published. The remaining U.S. inflation report is expected to continue influencing trader sentiment throughout the day.

GBP/USD Forecast and Trading Tips

Sales were possible earlier when the pair closed below the 1.3344–1.3357 zone on the hourly chart and after two rejections from that same zone, targeting 1.3265 and 1.3205. All targets were surpassed. Today, selling is possible on a rebound from 1.3205 with targets at 1.3139 and 1.3085. Buying will be possible if the pair consolidates above 1.3205 on the hourly chart, targeting 1.3344.

Fibonacci grids are drawn from 1.3205–1.2695 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.