On the hourly chart, the GBP/USD pair continued rising on Thursday and repeatedly tested the 200.0% Fibonacci level at 1.3749. A rebound from this level would favor the U.S. dollar and lead to a slight pullback toward the support zone at 1.3611–1.3633. A close above 1.3749 would increase the chances of further growth toward the next level of 1.3845. Bulls are pushing nearly without pause.

The wave pattern indicates the end of a short-lived bearish trend that lasted about a week. The last completed downward wave only slightly broke below the previous wave's low, while the new upward wave easily surpassed the previous high. Bearish traders are once again retreating, as the Middle East conflict came to a swift conclusion, and there remain few supporting factors for the U.S. dollar. Trump's trade war continues to have a destructive effect on the American currency.

On Thursday, two U.S. reports had a mixed impact on trader sentiment, though overall the mood remains strongly bullish. Also that day, Bank of England Governor Andrew Bailey stated that the recent spike in inflation has made the outlook uncertain. Bailey also pointed to weakening in the labor market. Earlier, MPC member Megan Greene noted that elevated inflation could become persistent and may not ease as quickly as many expect. As such, inflation could again become a serious challenge for the BoE. In this scenario, the next round of monetary policy easing may be delayed, further empowering the bulls.

On Friday, the U.S. will release the important Core PCE index, a key indicator for inflation. Historically, it tends to show only modest changes in prices, as it reflects a limited basket of core personal consumption goods. Therefore, chart signals will be especially significant for traders today.

On the 4-hour chart, the pair continues to rise toward the 127.2% Fibonacci level at 1.3795. A close above this level would allow for continued growth toward the next target of 1.4020. A rebound from 1.3795 would favor the U.S. dollar and lead to a slight decline within the still-valid ascending trend channel. No emerging divergences are observed on any indicators.

Commitments of Traders (COT) Report:

Sentiment among the Non-commercial trader category became slightly less bullish last week. The number of long positions held by speculators decreased by 4,794, while short positions increased by 3,983. However, bears have long lost their advantage in the market and currently stand little chance of success. The gap between long and short positions remains wide—43,000 in favor of the bulls (106K vs. 63K).

In my view, the pound still faces downside risks, but events in 2025 have completely reversed the market's long-term direction. Over the past three months, the number of long positions rose from 65K to 106K, while shorts fell from 76K to 63K. Under Donald Trump, confidence in the dollar has weakened, and the COT reports show that traders have little appetite for buying the greenback. Regardless of the overall news backdrop, the dollar continues to decline in response to developments surrounding Trump.

Economic calendar for the U.S. and UK:

• U.S. – Core PCE Price Index (12:30 UTC)
• U.S. – Personal Income and Spending Changes (12:30 UTC)
• U.S. – University of Michigan Consumer Sentiment Index (14:00 UTC)

Friday's calendar contains three entries that are not particularly market-moving. The news backdrop may have only a limited impact on sentiment later in the day.

GBP/USD forecast and trading advice:

Selling the pair is advisable if it rebounds from the 1.3749 level, with a target of 1.3611–1.3633. I previously recommended buying upon a close above the 1.3425–1.3444 zone, targeting 1.3527, the 1.3611–1.3633 zone, and the 1.3749 level. These trades can still be kept open, and a breakout above 1.3749 would set a new target at 1.3845.

Fibonacci levels are drawn from 1.3446–1.3139 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.