On the hourly chart, the GBP/USD pair traded horizontally on Monday within the support level of 1.3110–1.3139. Thus, as of Tuesday morning, the price has not yet performed either a rebound from this zone or a consolidation below it. If a rebound occurs, a reversal in favor of the pound and some growth toward the 127.2% Fibonacci retracement level at 1.3186 will take place. A consolidation of the pair below this zone will increase the likelihood of a continued decline toward the next Fibonacci level at 200.0% – 1.3024.

The wave situation remains bearish. The last completed upward wave broke the previous peak, while the most recent downward wave (still forming) has long since broken the previous low. In recent weeks, the information background has been negative for the U.S. dollar, yet bullish traders have not taken advantage of these conditions to advance. Last week, they abruptly withdrew from the market, despite the Federal Reserve's interest rate cut.

On Monday, there was no fundamental background for either the pound or the dollar. The bears finally stopped their daily attacks without reason, but the bulls did not go on the offensive either. The market situation is unlikely to change today, as no important news is expected on Tuesday. Technical (chart-based) analysis could have taken the lead, but traders' activity at the start of the new week is almost zero. Thus, whichever way you look at it, the GBP/USD pair's overall picture remains bleak. Today, trading is possible only from the 1.3110–1.3139 level, but more active trader participation is required. This week's Bank of England meeting could awaken traders. But who exactly will it awaken — the bulls or the bears? It is worth noting that the results of the Monetary Policy Committee (MPC) vote will play an important role. Depending on how many MPC members vote for an interest rate cut, the pound may either rise or fall.

On the 4-hour chart, the pair bounced off the 100.0% Fibonacci retracement level at 1.3435, which worked in favor of the U.S. currency, and then fell into the 1.3118–1.3140 support level, which has already twice stopped the pound's decline in the past. Thus, both charts show two strong support areas. A rebound from this zone would favor the pound and a rise toward 1.3339, while a consolidation below it would open the way for a decline toward 1.3044. No developing divergences are observed on any indicator.

Commitments of Traders (COT) Report

The sentiment of the "Non-commercial" trader category became more bullish during the most recent reporting week — though that report dates back a month. The number of Long positions held by speculators increased by 3,704, while the number of Short positions decreased by 912. The gap between the two positions is now roughly 85,000 vs. 86,000. The bulls are once again tipping the balance slightly in their favor.

In my view, the pound still has downward potential, but with each passing month, the U.S. dollar looks weaker and weaker. Previously, traders were worried about Donald Trump's protectionist policies without fully understanding their consequences. Now, they may be concerned about the results of those policies — the risk of a possible recession, the constant introduction of new tariffs, and Trump's ongoing pressure on the Federal Reserve, which could lead to the regulator becoming politically biased. Thus, the pound currently appears far less risky than the U.S. currency.

Economic Calendar for the U.S. and the U.K.

For November 4, the economic events calendar contains no entries. The information background will therefore have no impact on market sentiment on Tuesday.

GBP/USD Forecast and Trader Recommendations

Selling the pair was possible after closing below the 1.3354–1.3357 level on the hourly chart, with targets at 1.3313, 1.3247, and 1.3186 — all of which have already been reached with a margin. Today, I do not consider new short positions, as the pound has fallen significantly recently. Long positions may be considered in the event of a rebound from the 1.3110–1.3139 level on the hourly chart. The targets are 1.3186 and 1.3247.

The Fibonacci grids are constructed between 1.3247–1.3470 on the hourly chart and 1.3431–1.2104 on the 4-hour chart.