On the hourly chart, the GBP/USD pair made a new reversal in favor of the pound on Monday and consolidated above the 76.4% Fibonacci level at 1.3470, leading to a breakout of two previous peaks. This consolidation above 1.3470 opens the path for further growth toward the next retracement level at 61.8% – 1.3530. I believe the bearish trend has ended, though a close below 1.3470 could trigger a small pullback.

As expected, the wave configuration has shifted in favor of the bulls. Several downward waves had formed, each breaking below the low of the previous one. The current upward wave has broken through the highs of the two previous waves, effectively breaking not just the bearish trend, but also the corrective bearish pullback. I now expect further growth based on this wave formation.

There were no economic updates from either the UK or the U.S. on Monday. However, Donald Trump twice reiterated threats to increase tariffs on the European Union starting August 1 (even though this was already known weeks ago), prompting the bears to retreat once again. In my view, the news background has consistently worked against the bears in recent weeks, yet they still managed to stage several attacks. Over time, these attacks became increasingly difficult due to a lack of support. Now, the bulls have every chance to resume the uptrend. Still, while expectations for dollar weakness are justified, we shouldn't forget about chart analysis. It's always essential to have a backup plan.

Today, Fed Chair Jerome Powell is scheduled to speak in the U.S., but traders' attention is focused less on monetary policy and more on the power struggle between Powell and Trump. Powell rarely responds publicly to Trump, so any remarks regarding pressure from the U.S. President or his potential departure are treated as highly significant by traders.

On the 4-hour chart, the pair overall remains in a downward movement. However, following the formation of a bullish divergence, the pair reversed in favor of the pound and closed above the 100.0% Fibonacci level at 1.3435. This opens the potential for a renewed bullish move toward the 127.2% retracement level at 1.3795. The hourly chart also supports the idea of a renewed bullish trend. As for support, I recommend focusing not on 1.3435 but on 1.3378.

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 7,039, while the number of short positions dropped by 3,036. However, the bears have long since lost their advantage in the market and currently have no real prospects for success. The gap between long and short positions remains wide—30,000 in favor of the bulls: 101,000 vs. 71,000.

In my view, the pound still has downward potential, but developments in 2025 have completely shifted the market in the long term. Over the past four months, the number of long positions has increased from 65,000 to 101,000, while short contracts declined from 76,000 to 71,000. The changes are not as drastic as with the euro, but they are still significant. Under Donald Trump, confidence in the dollar has been shaken, and the COT reports show that traders have little interest in buying the dollar. Thus, regardless of the broader news narrative, the dollar continues to fall amid the political developments surrounding Donald Trump.

News Calendar – U.S. and U.K.:

• U.S. – Fed Chair Jerome Powell speaks (12:30 UTC)

Tuesday's economic calendar contains only one key entry. The news background may still influence trader sentiment today.

GBP/USD Forecast and Trading Tips:

I do not recommend considering new short positions, as the dollar, in my view, has already gone too far. Long positions could have been opened on a rebound from the 1.3357–1.3371 zone, targeting 1.3425 and 1.3470—both targets were met. New long positions were possible upon a close above 1.3470, targeting 1.3530 and 1.3579. These trades can remain open today, aiming for a bounce from 1.3470.

The Fibonacci grids are drawn from 1.3371 to 1.3787 on the hourly chart and from 1.3431 to 1.2104 on the 4-hour chart.