On the hourly chart, GBP/USD bounced off the 100.0% Fibonacci retracement level at 1.3272 on Wednesday, reversed in favor of the US dollar, fell below the 1.3164–1.3177 support level, reversed in favor of the pound, and returned to the 1.3272 level. A rebound from 1.3272 today would once again favor the US dollar and could lead to a decline toward the 1.3164–1.3177 level. Consolidation above 1.3272 would suggest further growth and signal a reversal of the bearish trend.

The market situation remains entirely bearish. The latest completed downward wave broke below the previous low, while the new upward wave has not yet broken above the previous high. Thus, the bears continue to control the market. The FOMC's monetary policy tightening and the hawkish outlook communicated by Kevin Warsh continue to support the dollar. The current trend can now reverse only above 1.3272.

The news background on Wednesday initially supported bearish traders. However, within a few hours, the market began to recognize that the US inflation report had not strengthened hawkish expectations. Inflation increased more than forecast, but not enough to suggest that the FOMC would tighten monetary policy twice before the end of the year. The market has already priced in one rate hike. Therefore, no new factors supporting further US dollar appreciation are apparent. The pound has been trading in a range between 1.3177 and 1.3272 in recent weeks and remains within it for now. The bulls will be able to launch an advance of their own only above 1.3272. Today's UK reports on industrial production and GDP for August may help them achieve this. However, yesterday's disappointment could also prompt traders to resume selling the US dollar. In my view, the bearish trend is nearing its end, but it remains intact below 1.3272.

On the four-hour chart, GBP/USD bounced off the 100.0% Fibonacci retracement level at 1.3159 and reversed in favor of the pound, rising toward the 76.4% retracement level at 1.3277. The technical picture on the hourly chart is currently more convincing, so the hourly chart is the one to focus on. No new developing divergences are visible on any indicator today.

Commitments of Traders (COT) Report

Sentiment among Non-commercial traders became even more bearish over the latest reporting week. The number of Long positions held by speculators increased by 3,863, while the number of Short positions rose by 10,399. The current gap between Long and Short positions stands at approximately 45,000 versus 143,000, respectively. The bears' advantage is widening again. Previously, bearish dominance was unquestionable, but it has become less clear-cut as the news background has changed in recent months.

The bearish trend in the pound remains unconvincing. However, developments in the near term will depend on Trump's trade policy, the monetary policies of the Federal Reserve and the Bank of England, and the duration, scale, and consequences of the war in the Middle East. In recent months, the market had shifted toward expectations of peace, but negotiations between Iran and the United States failed before they had properly begun. There is no guarantee that they will resume in the near future.

US and UK Economic Calendar

• United Kingdom – GDP growth for August (06:00 UTC).
• United Kingdom – Change in industrial production (06:00 UTC).
• United States – Producer Price Index (12:30 UTC).
• United States – Change in retail sales (12:30 UTC).
• United States – Change in initial jobless claims (12:30 UTC).

On October 15, the economic calendar contains five releases, none of which stands out as particularly significant. The impact of economic data on market sentiment on Thursday may be limited.

GBP/USD Forecast and Trading Recommendations

Selling the pair was possible following a rebound from 1.3272 on the hourly chart, with a target of 1.3164–1.3177. The target was reached. New short positions may be considered if the pair rebounds from 1.3272 again, with the same target. Long positions may be considered today if the pair closes above 1.3272, with a target of 1.3368.

The Fibonacci retracement levels are drawn from 1.3272 to 1.3674 on the hourly chart and from 1.3158 to 1.3655 on the four-hour chart.