On the hourly chart, the GBP/USD pair on Tuesday rose to the 76.4% retracement level at 1.3482, rebounded, and turned in favor of the U.S. currency. Thus, the decline may continue toward the support zone of 1.3416–1.3425. A rebound from this zone would favor the British pound and some growth toward 1.3482. Consolidation above 1.3482 would also allow for further growth toward the 100.0% retracement level at 1.3586.

The wave structure remains "bearish," strange as that may sound after the fairly strong rally in recent weeks. The last completed upward wave did not break the previous peak, and the last downward wave did not break the previous low. The information background has played a huge role in shaping the waves we have seen in recent weeks. In my view, the news flow has already turned the pair in favor of the bulls, so the trend may soon become "bullish" again.

On Tuesday, the news background slightly helped the bulls, but they were unable to secure consolidation above 1.3482. Today, no important news is expected, which increases the likelihood of sideways movement during the day. Last Friday, Jerome Powell's speech prompted the bulls to launch an aggressive advance, but the start of the new week forced them to reassess their own strength and grounds for further growth. Despite the almost 100% probability of an FOMC rate cut in September, I would say that this probability reflects cumulative expectations. In other words, traders have been expecting policy easing since the start of the year and therefore are confident about the Fed's September decision. However, in reality, upcoming reports on inflation, business activity, and the labor market will be decisive. Powell merely allowed for the possibility of easing on Friday, but he did not say a word specifically about September. Thus, next week, the 100% probability could turn into 50% if the Nonfarm Payrolls report shows the first positive result in four months.

On the 4-hour chart, the pair turned upward in favor of the pound after rebounding from the support zone at 1.3378–1.3435. Growth may continue toward the next retracement level of 127.2% at 1.3795. A new rebound from this zone would increase the probability of further growth in the British currency. No emerging divergences are observed in any indicator today.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" category of traders became more "bullish" over the past reporting week. The number of long positions held by speculators increased by 7,567, while the number of short positions decreased by 6,341. The gap between the number of long and short positions is now about 81,000 versus 106,000. But, as we can see, the pound is leaning more toward growth, and traders toward buying.

In my opinion, the pound still faces prospects for decline. The news background for the U.S. dollar during the first six months of the year was terrible, but it is slowly starting to improve. Trade tensions are easing, major deals are being signed, and the U.S. economy in the second quarter will recover thanks to tariffs and various types of investments in the United States. At the same time, the prospects of Fed monetary easing in the second half of the year are already creating significant pressure on the dollar. Thus, I do not yet see grounds for a "dollar trend."

News calendar for the U.S. and the UK:

On August 27, the economic events calendar contains no notable entries. The news background will have no influence on market sentiment on Wednesday.

Forecast for GBP/USD and trader recommendations:

Sales of the pair were possible from the rebound at 1.3482, targeting 1.3416–1.3425. These trades can remain open. For buying the pair, a close above 1.3482 on the hourly chart is required, or a rebound from the 1.3416–1.3425 zone with a target of 1.3586.

Fibonacci grids are built from 1.3586–1.3139 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.