On the hourly chart, the GBP/USD pair continued its upward movement toward the 127.2% Fibonacci retracement level at 1.3003 on Wednesday. The growth was weak, and the bulls failed to reach their target. However, they continued their attacks with their last remaining strength. A consolidation of the pair below 1.2931 would favor the U.S. dollar and lead to a decline toward the levels of 1.2865 and 1.2810.

The wave structure is entirely clear. The last completed downward wave did not break the low of the previous wave, while the last upward wave broke the previous peak. This confirms that a bullish trend is still forming. The pound has shown significant, even excessive, growth recently. The fundamental backdrop does not appear strong enough for the bulls to push forward without pauses. However, most traders refuse to buy the dollar regardless of economic data, as Trump continues to impose new tariffs every other day, which will eventually impact U.S. economic growth as well as many other economies.

The fundamental backdrop on Wednesday allowed bullish traders to continue their offensive. U.S. inflation data came in weaker than expected. The Consumer Price Index (CPI) slowed from 3.0% y/y to 2.8%, missing the 2.9% forecast. The Core CPI declined from 3.3% y/y to 3.1%, below the expected 3.2%. These figures suggest that there is no immediate reason for the Fed to aggressively ease monetary policy. U.S. inflation remains well above the target level, making rate cuts premature. Additionally, Trump's policies could soon lead to renewed price growth, not just in the U.S. but globally. Therefore, I do not expect a rate cut at the next FOMC meeting. However, it must be acknowledged that bulls had a formal reason to continue their push yesterday.

On the 4-hour chart, the pair continues its upward movement after consolidating above the 50.0% Fibonacci retracement level at 1.2861, which allows it to move toward the 38.2% retracement level at 1.2994. I do not expect a significant decline in the pound unless the price closes below the ascending channel. The CCI indicator has formed a bearish divergence, but so far, this has not affected the bulls' position. A rebound from 1.2994 could lead to a slight pullback toward the 50.0% Fibonacci level at 1.2861.

Commitments of Traders (COT) Report:

The Non-commercial category of traders became less bearish in the latest reporting week. Long positions held by speculators increased by 7,777, while Short positions decreased by 6,334. The bears have lost their advantage in the market. The difference between Long and Short positions is now nearly 20,000 in favor of the bulls (82,000 vs. 63,000).

I believe that the pound still has downward potential, but recent developments could shift the market's long-term outlook. Over the past three months, Long positions have dropped from 98,000 to 81,000, while Short positions have decreased from 78,000 to 63,000. Over time, institutional traders may continue reducing their Long positions or increasing their Short positions, as all possible supportive factors for the British pound have already been priced in. However, a major shift in sentiment toward the U.S. economy due to Trump's policies could deter traders from buying the dollar and selling the pound.

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

• U.S. – Producer Price Index (12:30 UTC)
• U.S. – Initial Jobless Claims (12:30 UTC)

Thursday's economic calendar includes two events, but they are not significant for traders. The fundamental backdrop is unlikely to have a strong impact on market sentiment today.

GBP/USD Forecast and Trading Recommendations:

Short positions are possible today after a rebound from 1.2994 on the 4-hour chart or if the price closes below 1.2931 on the hourly chart, with targets at 1.2865 and 1.2810. Long positions can be considered after a rebound from 1.2931 on the hourly chart, targeting 1.2994.

Fibonacci retracement levels:

• Hourly chart: 1.2809–1.2100
• 4-hour chart: 1.2299–1.3432