On the hourly chart, GBP/USD continued its decline on Wednesday and consolidated below the 76.4% Fibonacci level at 1.3482. Thus, the British pound may extend its fall toward the support zone of 1.3416–1.3425. A rebound from this zone would favor the pound and a resumption of growth toward the 100.0% retracement level at 1.3586. Consolidation below this zone would increase the likelihood of a continued decline toward the next support level of 1.3357–1.3364.

The wave situation remains "bearish," no matter how strange that sounds after two weeks of growth. The last completed downward wave broke through the lows of all previous waves, while the latest upward wave failed to surpass the previous peak. The news backdrop played a major role in shaping the waves we have seen in recent weeks. In my view, the fundamental background has already turned the pair in favor of the bulls, so the trend may soon become "bullish" again. In the coming days, a downward wave is possible, which would represent a corrective pullback.

The news background on Wednesday was relatively weak. In the morning, the UK published an inflation report that exceeded traders' expectations, allowing the bulls to stage a quick rally with consolidation above 1.3482. However, they lacked further "fuel," and the bears quickly regained the initiative. Unfortunately, the UK inflation report only spoiled the intraday chart picture, as without it, a close above 1.3482 likely would not have occurred. High inflation is a positive factor for the pound, but bull traders continue to build strength for another advance. Today, PMI data will be released, and tomorrow Jerome Powell will speak, clarifying the situation ahead of the September FOMC meeting. It seems the market is waiting for this event, but Powell's rhetoric could disappoint.

On the 4-hour chart, the pair turned in favor of the dollar after forming a "bearish" divergence on the CCI indicator, while a "bullish" divergence on the same indicator prevented growth from resuming. A new "bullish" divergence on the CCI is now emerging, which may coincide with a rebound from the 1.3435–1.3378 level.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became more "bearish" in the last reporting week. The number of long positions held by speculators rose by 8,101, while the number of short positions increased by 13,891. However, the sharp decline in interest in the pound according to COT reports does not reflect the real picture of the market, as interest in the dollar is also falling. The gap between long and short contracts currently stands at about 74,000 versus 113,000. Yet, as we can see, the pound continues to rise.

In my opinion, the pound still has downward potential. The news background in the first six months of the year was disastrous for the US dollar, but it is gradually shifting in a positive direction. Trade tensions are easing, key agreements are being signed, and the US economy in the second quarter will recover thanks to tariffs and various types of investments in the country. At the same time, the prospects of Fed monetary policy easing in the second half of the year could put significant pressure on the dollar.

News Calendar for the US and the UK:

United Kingdom – Services PMI (08:30 UTC). United Kingdom – Manufacturing PMI (08:30 UTC). United States – Initial Jobless Claims (12:30 UTC). United States – Services PMI (13:45 UTC). United States – Manufacturing PMI (13:45 UTC). United States – Existing Home Sales (14:00 UTC).

On August 21, the economic calendar is quite full. The news background will continue to influence market sentiment on Thursday.

GBP/USD Forecast and Trading Tips:

Sales of the pair were possible on a rebound from 1.3586 on the hourly chart with a target at 1.3482. The target has been reached. New sales were possible after closing below 1.3482 with a target of 1.3416–1.3425. For buying opportunities, the pair needs to consolidate above 1.3482 or rebound from the 1.3416–1.3425 zone. The target is 1.3586.

Fibonacci levels are built from 1.3586–1.3139 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.