On the hourly chart, GBP/USD on Tuesday reversed in favor of the U.S. dollar and fell toward the support zone at 1.3357–1.3364. A rebound from this zone today will work in favor of the pound and some growth toward the resistance zone at 1.3416–1.3425. A close of the pair below 1.3357–1.3364 would allow for further decline toward the next Fibonacci level of 38.2% at 1.3311.

The wave situation remains bearish, confirmed by yesterday's decline. The last completed upward wave broke the peak of the previous wave by only a few points, while the last downward wave broke two previous lows at once. The news background played a huge role in shaping the waves we have seen in recent weeks. In my view, the background is not bullish, but individual events are still supporting the bears.

On Tuesday, traders' attention was focused on anything but UK bonds. On Tuesday, government bond yields rose to a record 5.7%, which caused a sharp fall in the British currency. Note that yields had been rising before, as it is unlikely they suddenly reached record levels since 1998 in a single day. Thus, the pound's collapse could have occurred any day, but it happened yesterday. Rising UK bond yields mean higher costs of servicing the debt, amid greater government demand for borrowing. The UK budget is in deficit, money is short, so more borrowing is needed. With higher yields, debt servicing becomes more expensive. Inflation is also rising, with money depreciating at about 4% annually. The news background unexpectedly turned 180 degrees against the pound.

On the 4-hour chart, the pair reversed in favor of the dollar and consolidated below the support zone at 1.3378–1.3435, from which it had previously rebounded twice. Thus, the decline may continue toward the 76.4% Fibonacci retracement level at 1.3118. The chart picture is mixed, with traders moving the pair back and forth. At this stage, I recommend paying closer attention to the hourly chart. No divergences are forming on any indicators.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" category of traders over the past reporting week became more bearish. The number of long positions held by speculators decreased by 5,302, while the number of shorts increased by 866. The gap between longs and shorts is now roughly 76,000 vs. 107,000. However, as we can see, the pound still tends to rise, and traders lean toward buying.

In my view, the pound still has room to fall. The news background in the first six months of the year for the U.S. dollar was terrible, but it is gradually improving. Trade tensions are easing, key deals are being signed, and the U.S. economy in the second quarter will recover thanks to tariffs and various forms of investment in the U.S. At the same time, expectations of Fed monetary easing in the second half of the year have already begun to put serious pressure on the dollar. Thus, for now, I do not see grounds for a "dollar trend."

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

U.S. – JOLTS Job Openings (14:00 UTC).

On September 3, the economic calendar contains one noteworthy release. The influence of the news background on market sentiment on Wednesday will be felt in the second half of the day.

GBP/USD Forecast and Trader Tips:

Selling the pair was possible on a close below 1.3482 on the hourly chart. All nearby targets have been reached. Today, sales will be possible on a close below 1.3357–1.3364 with targets at 1.3311 and 1.3246. Buying will be possible on a rebound from 1.3357–1.3364 with targets at 1.3416–1.3425 and 1.3482.

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