On the hourly chart, GBP/USD made a second rebound from the 1.3526–1.3557 resistance level on Wednesday, reversed in favor of the U.S. currency, and began declining toward the 1.3454–1.3458 support level. A rebound in prices from this zone would favor the pound and a resumption of the upward move. A close below the 1.3454–1.3458 level would increase the chances of a further decline toward the next Fibonacci level of 38.2% at 1.3397.

The situation has turned "bullish," but only because of a significant reduction in the size of the identifiable waves. The latest completed downward wave did not break the previous low, while the latest upward wave (which is still forming) broke the previous high. Thus, the bulls currently have the initiative in the market, but their advantage is not clear-cut. Three unsuccessful attempts to break through the 1.3526–1.3557 level could allow the bears to go on the offensive.

The fundamental backdrop on Wednesday was not particularly supportive of the bears, yet it was the bears who emerged victorious from another confrontation with the bulls. The U.S. inflation report could be interpreted in different ways. Initially, traders began selling the dollar again, as the chances of FOMC monetary policy tightening in September continue to fade. However, toward the evening, the bears went on the offensive as the bulls once again failed to break through the 1.3526–1.3557 level. This morning, the UK released reports on second-quarter GDP and June industrial production, which could also be interpreted in different ways. GDP grew by 0.4% q/q in the second quarter, in line with traders' expectations, while the annual figure increased by 1.2%, compared with a forecast of 1.1%. At the same time, industrial production fell by 0.2% m/m, although the market had expected a 0.1% increase. On Thursday morning, the pound is falling, and the bulls are retreating again. Thus, traders interpreted all three reports as negative for the pound and positive for the U.S. dollar. The decline may continue.

On the 4-hour chart, GBP/USD rebounded from the 23.6% retracement level at 1.3538, reversed in favor of the U.S. dollar, and fell into the 1.3467–1.3482 level. A rebound from this zone would preserve the pound's chances of resuming its upward move. Consolidation below this zone would allow traders to expect a bearish advance, with the first target being the 50.0% Fibonacci level at 1.3409. No emerging divergences are currently observed in any of the indicators.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became less "bearish" over the latest reporting week. The number of Long positions held by speculators decreased by 6,446, while the number of Short positions increased by 13,446. The gap between the numbers of Long and Short positions is currently roughly 55,000 versus 113,000. The gap and the bears' advantage are gradually narrowing, but the bears still retain a substantial advantage. Previously, the bears' dominance was unquestionable, but it is now less clear-cut because the fundamental backdrop has changed.

I still do not believe in a "bearish" trend for the pound, but in the near term everything will depend not on economic indicators, Trump's trade policy, or the monetary policies of central banks, but on the duration, scale, and consequences of the war in the Middle East. In recent months, the market has repositioned itself toward peace, but negotiations between Iran and the United States failed before they had properly begun. And there is no guarantee that they will resume in the near future.

Economic calendar for the United States and the United Kingdom:

• U.S. – Producer Price Index (12:30 UTC).
• U.S. – Change in initial jobless claims (12:30 UTC).

On August 13, the economic calendar contains two entries, both of secondary importance. The impact of the fundamental backdrop on market sentiment on Thursday will be weak or absent.

GBP/USD forecast and trading tips:

Selling the pair was possible following a rebound from the 1.3526–1.3557 level on the hourly chart, with a target of 1.3454–1.3458. These trades can be kept open today. Buying is possible today following a rebound from the 1.3454–1.3458 level, with a target of 1.3526–1.3557.

The Fibonacci grids are drawn from 1.3140–1.3557 on the hourly chart and from 1.3158–1.3655 on the 4-hour chart.