On the hourly chart, the GBP/USD pair rebounded from the 261.8% Fibonacci level at 1.2303 on Thursday, reversed in favor of the British pound, and secured itself above the 1.2363–1.2370 resistance zone. This suggests the potential for continued growth toward the next resistance zone at 1.2488–1.2508. However, the pound's growth is currently limited by the upward trend channel that supports its continuation. The pair is now near the upper boundary of this channel, making further short-term growth uncertain.
The wave structure remains clear. The last completed downward wave broke the low of the previous wave, while the last upward wave has yet to approach its previous peak. This indicates the continuation of a bearish trend, with no signs of reversal at this point. To terminate this trend, the pound must rise to at least 1.2569 and securely close above it. Such a scenario is unlikely to materialize today.
Thursday brought little economic news from both the UK and the US, although President Donald Trump did speak, calling for the Federal Open Market Committee (FOMC) to cut rates. It's important to note that the Federal Reserve's plans differ significantly from those of the newly inaugurated U.S. president. Their objectives diverge as well. Next week, the Fed will hold its first meeting of the year. While traders do not expect any changes to monetary policy parameters, Trump's remarks yesterday make Fed Chair Jerome Powell's upcoming comments highly anticipated.
If Powell shows leniency and hints at a willingness to accelerate rate cuts, bearish traders will retreat further. Currently, the market expects no more than two 0.25% rate cuts from the Fed in 2025. However, if Powell signals the possibility of more aggressive easing, the dollar could face significant challenges. The current bullish trend is very weak and could end at any moment. Trump cannot consistently support dollar bears every day.
On the 4-hour chart, the pair may continue to grow within a downward trend channel. However, the hourly chart indicates the likelihood of bears regaining control in the near term. For now, I recommend focusing more on the hourly chart. No divergence signals are observed in any indicators today.
The sentiment among the "Non-commercial" category of traders became significantly more bearish last week. The number of long positions held by speculators decreased by 786, while short positions increased by 13,282. Bulls have lost all their market advantage, a process that has unfolded over several months. The gap between long and short positions is now non-existent, with both at 80,000.
In my view, the pound retains the potential for further declines, and COT reports indicate growing bearish positions nearly every week. Over the past three months, long positions have decreased from 161,000 to 80,000, while short positions have risen from 67,000 to 80,000. I expect professional players to continue shedding long positions or increasing shorts over time, as all possible factors for buying the British pound have already been priced in. Graphical analysis also supports the pound's decline.
Friday's economic calendar includes several noteworthy events. The influence of the news background on market sentiment may be moderate throughout the day.
Selling opportunities will arise if the pair consolidates below the ascending trend channel on the hourly chart. Buying opportunities remain viable, given that the pair closed above the 1.2363–1.2370 zone on the hourly chart. However, the influence of today's economic news could negate any potential gains.
Fibonacci levels are plotted at 1.3000–1.3432 on the hourly chart and 1.2299–1.3432 on the 4-hour chart.
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