On the hourly chart, the GBP/USD pair on Tuesday first rebounded from the 100.0% corrective level at 1.3470, and then from the resistance level of 1.3526–1.3539. Thus, the pair has been trading within the 1.3437–1.3539 sideways range for the third consecutive day. Today, another rebound from the 1.3526–1.3539 level would favor the U.S. dollar, while a consolidation above this level would increase the likelihood of continued growth toward 1.3595–1.3620.

The wave structure remains "bearish." The last completed upward wave failed to break the previous high, while the latest downward wave broke the previous low. To shift the trend back to "bullish," a consolidation above the last peak at 1.3730 or two consecutive bullish waves are required. The news background for the pound has been weak in recent months, but the news background in the U.S. has rarely truly pleased traders either. Recently, the pound has been on a "losing streak," but Donald Trump has regularly supported the bulls.

On Tuesday, the news background had no impact on traders. The Iran issue remains the main topic of discussion in the market, so even events such as the cancellation of Trump's tariffs by the U.S. Supreme Court and the reintroduction of new tariffs by the U.S. president went almost unnoticed. Nevertheless, the bulls managed to halt the bears' offensive, which had dragged on for quite a while. The bearish trend will not last forever, and the news background for the dollar is too contradictory and ambiguous to expect further strengthening of the U.S. currency. There are virtually no major events or reports scheduled this week, which explains the sideways movement. Only a few interesting reports from Germany will be released on Friday, but they are unrelated to the pound for obvious reasons. Thus, the sideways movement may persist until the end of the week. Chart signals will be the main basis for trading this week.

On the 4-hour chart, the pair declined to the support level of 1.3369–1.3435, rebounded from it, and reversed in favor of the pound. A growth process has begun, but it remains within the descending trend channel. Therefore, significant growth of the pair can be expected only after a consolidation above the channel. In this case, bullish traders will once again aim for the 127.2% Fibonacci level at 1.3795. No emerging divergences are currently observed on any indicator.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became slightly less bullish over the last reporting week. The number of long positions held by speculators decreased by 6,358, while the number of short positions increased by 10,236. The gap between long and short positions now stands at roughly 82,000 versus 124,000. In recent months, bears have more often dominated, although the situation with euro contracts is directly opposite. I still do not believe in a sustained bearish trend for the pound under any circumstances.

In my view, the pound still looks less "dangerous" than the dollar, and that is its main advantage. In the short term, the U.S. currency may occasionally enjoy demand in the market — but not in the long term. Donald Trump's policies have led to a sharp decline in the labor market, and the Federal Reserve is forced to ease monetary policy to stimulate job creation. U.S. military aggression and the trade war also do not add optimism for dollar bulls.

News Calendar for the U.S. and the U.K.:

On February 25, the economic calendar contains no noteworthy entries. The news background is expected to have no impact on market sentiment on Wednesday.

GBP/USD Forecast and Trading Tips:

Selling the pair was possible after a rebound from the 1.3526–1.3539 level on the hourly chart, targeting 1.3437–1.3470. New short positions may be considered upon another rebound from the 1.3526–1.3539 zone with the same target. Buying opportunities arose after a rebound from the 1.3437–1.3470 zone on the hourly chart, targeting 1.3526–1.3539. Today, long positions may be considered after a close above the 1.3526–1.3539 level with a target of 1.3595–1.3620.

Fibonacci levels are plotted from 1.3470–1.3010 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.