On the hourly chart, the GBP/USD pair on Tuesday continued a weak decline and even consolidated below the 76.4% Fibonacci level – 1.3482. However, this morning bullish traders went on the offensive, and consolidation above 1.3482 would allow for some growth toward the 100.0% retracement level – 1.3586. I am not counting on strong growth or strong decline of the pair today. Trader activity remains low due to the small number of news events.

The wave structure remains "bearish," no matter how strange that may sound after two weeks of growth. The last completed downward wave broke through the low of all previous waves, while the last upward wave failed to break the previous high. The news background played a huge role in shaping exactly the waves we have seen in recent weeks. In my view, the news background has already turned the pair toward bulls, so the trend may soon become "bullish" again. In the coming days, a downward wave is possible, which would be a corrective pullback.

On Tuesday, there was once again no news background, but this morning the UK released its inflation report. As most traders expected, the consumer price index rose from 3.6% to 3.8%. Core inflation also accelerated to 3.8%. Thus, inflation has already more than doubled over the past year. And this is despite the trade agreement signed between the UK and the US two months ago. Donald Trump's tariffs continue to work and exert a negative impact on prices even with a trade deal in place. Proof of this is the UK, which was the first to reach an agreement with Washington. Thus, forecasts are disappointing – inflation is likely to rise globally. Central banks (excluding the Fed) are unlikely to think about cutting rates in the near future. This especially applies to the Bank of England, which has already cut its rate three times this year.

On the 4-hour chart, the pair turned in favor of the dollar after a "bearish" divergence formed on the CCI indicator, while a "bullish" divergence on the same indicator did not allow growth to resume. At the moment, market movements are weak, so it is better to focus on the hourly chart.

Commitments of Traders (COT) Report:

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

In my view, the pound still faces prospects of decline. The news background for the US dollar in the first six months of the year was disastrous, but it is slowly beginning to shift in a positive direction. Trade tensions are easing, the most important deals are being signed, and the US economy will recover in the second quarter thanks to tariffs and various types of investments in the US. At the same time, the prospects for Fed monetary policy easing in the second half of the year could create serious pressure on the dollar.

News calendar for the US and UK:

United Kingdom – Consumer Price Index (06:00 UTC).

On August 20, the economic calendar contains quite an important release. The news background will affect market sentiment on Wednesday, but only in the morning.

GBP/USD forecast and trader advice:

Sales of the pair were possible on a rebound from the 1.3586 level on the hourly chart with a target of 1.3482. The target was achieved. New sales will be possible if the pair closes below 1.3482 with a target of 1.3416–1.3425. For purchases, the pair needs to consolidate above 1.3482. The target would then be 1.3586.

The Fibonacci grid is built from 1.3586–1.3139 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.