On the hourly chart, the GBP/USD pair on Thursday reversed once again in favor of the British pound and began a renewed move toward the resistance zone of 1.3344–1.3357. A rebound from this zone will again work in favor of the U.S. dollar and could lead to a renewed decline toward the 100.0% Fibonacci retracement level at 1.3205. A breakout above the 1.3344–1.3357 area would increase the likelihood of continued growth toward the next level at 1.3425.

The wave situation became more complex after the latest bullish assault. The last completed upward wave broke through the previous peak, but the most recent downward wave also broke through the previous low. This suggests a potential transition from a bearish to a bullish trend. Bulls may find it difficult to rise above 1.3425 without new trade-related headlines from Donald Trump about new or expanded tariffs—but bears haven't had it easy either, as recent days have shown. In my opinion, the latest upward wave was a fluke; the 1.3344–1.3357 zone will reveal the true strength of the bulls.

The news background on Thursday offered slight support to the bulls. The UK economy grew more than expected, allowing pound bulls to mount a new, albeit weak, attack—dampened by a worse-than-expected industrial production report. From the U.S., the Producer Price Index fell sharply by 0.5% m/m in April. However, we already know that CPI also decreased—from 2.4% y/y to 2.3%. This brings the Fed closer to a tipping point where it will become increasingly difficult to resist market pressure. The market is calling for a rate cut, Donald Trump is demanding monetary easing, and only Jerome Powell remains defiant, expecting inflation to rise again. Yet Powell won't be able to hold his ground indefinitely without supportive data. Therefore, bears are urgently in need of good news—such as tariff reductions, signed trade deals, or any other positive headlines. Otherwise, bulls could regain the upper hand on expectations of policy easing.

The sentiment among the "Non-commercial" trader category became more bullish over the last reporting week. The number of long positions held by speculators rose by 3,320, while short positions declined by 1,956. Bears lost their advantage. The gap between long and short positions now stands at 29,000 in favor of bulls: 94K vs. 65K.

In my view, the pound still faces downside risks, but recent developments could prompt a long-term trend reversal. Over the past three months, the number of long positions has risen from 65K to 94K, and short positions have fallen from 76K to 65K. Under Donald Trump, faith in the U.S. dollar has eroded, and COT data show that traders lack a strong appetite for dollar-buying.

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

• U.S. – Building Permits (12:30 UTC)
• U.S. – Housing Starts (12:30 UTC)
• U.S. – University of Michigan Consumer Sentiment Index (14:00 UTC)

On Friday, the economic calendar includes several entries, but none are particularly significant. Market sentiment may be only mildly affected by the data releases.

GBP/USD Forecast and Trading Tips:

Selling the pair was possible on a rebound from the 1.3344–1.3357 zone on the hourly chart with targets at 1.3265 and 1.3205. Today, selling is again possible from this resistance zone. Buying may be considered on a confirmed breakout above 1.3344–1.3357 with a target at 1.3425.

Fibonacci levels:

• Hourly chart: based on 1.3205 – 1.2695
• 4-hour chart: based on 1.3431 – 1.2104