On the hourly chart, the GBP/USD pair continued its decline on Thursday and reached the support level of 1.3437–1.3470. A rebound from this zone would favor the pound and some growth toward the resistance level of 1.3526–1.3539. A consolidation below the 1.3437–1.3470 level would increase the likelihood of a further decline toward the 1.3352–1.3362 level.

The wave situation remains "bearish." The last completed upward wave failed to break the previous peak, while the new downward wave broke the previous low. To shift the trend back to "bullish," a consolidation above the last peak at 1.3730 or two consecutive bullish waves are required. The news background for the pound has been weak in recent months, but the U.S. news flow has also rarely pleased traders. Donald Trump regularly supports the bulls, but recently the pound has clearly been going through a "black streak."

Thursday's news background was fairly weak for both the pound and the dollar, but the only report on initial jobless claims in the U.S. still supported the bears. I do not consider this report the main reason for the pound's decline on Thursday, but it did play its part. This morning, the UK released a retail sales report, and later the services and manufacturing PMI figures will be published. The first report of the day was positive for the pound, as retail sales volumes rose by 1.8% in January compared to the forecast of +0.2% month-on-month. However, there are still many important releases ahead today, so traders' sentiment could once again turn bearish. Special attention should be paid to the U.S. GDP report for the fourth quarter, as there is a high probability of an unexpected result. At the moment, traders expect the U.S. economy to grow by 3%. The actual figure may be lower.

On the 4-hour chart, the pair rebounded from the 127.2% Fibonacci level at 1.3795 and has since continued declining toward the support level of 1.3369–1.3435. The bearish trend on the hourly chart has not yet been completed. A rebound from the 1.3369–1.3435 support level would allow traders to expect a resumption of the bullish trend toward the 1.3495 level. No emerging divergences are currently observed on any indicators.

Commitments of Traders (COT) report:

The sentiment of the "Non-commercial" category of traders became slightly less bullish over the last reporting week. The number of long positions held by speculators decreased by 6,520, while the number of short positions increased by 5,379. The gap between long and short positions is now effectively 88,000 versus 114,000 and continues to narrow. In recent months, bears have dominated, but it seems they may have exhausted their potential. At the same time, the situation with euro contracts is exactly the opposite. I still do not believe in a sustained bearish trend for the pound under any circumstances.

In my view, the pound still looks less "dangerous" than the dollar, and that is its main advantage. In the short term, the U.S. currency may occasionally see demand in the market, but not in the long term. Donald Trump's policies have led to a sharp decline in the labor market, and the Federal Reserve is forced to ease monetary policy to stimulate job creation. U.S. military aggression also does not add optimism for dollar bulls.

News calendar for the U.S. and the UK:

• UK – Retail Sales m/m (07:00 UTC).
• UK – Manufacturing PMI (09:30 UTC).
• UK – Services PMI (09:30 UTC).
• U.S. – Core Personal Consumption Expenditures (13:30 UTC).
• U.S. – GDP Growth Rate, Q4 (13:30 UTC).
• U.S. – Personal Income/Spending (13:30 UTC).
• U.S. – Manufacturing PMI (14:45 UTC).
• U.S. – Services PMI (14:45 UTC).

On February 20, the economic calendar will be quite busy. The impact of the news background on market sentiment on Friday may persist throughout the day.

GBP/USD forecast and trading advice:

Selling the pair was possible after a consolidation below the 1.3595–1.3620 level on the hourly chart, with targets at 1.3526–1.3539 and 1.3437–1.3470. Both targets have been reached. New sales are possible after a close below 1.3437–1.3470, with a target of 1.3352–1.3362. Buying may be considered after a rebound from the 1.3437–1.3470 level on the hourly chart, with targets at 1.3526–1.3539 and 1.3595.

Fibonacci retracement grids are constructed from 1.3470–1.3010 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.