On the hourly chart, the GBP/USD pair on Friday fell below the 76.4% Fibonacci level – 1.3482, but then reversed in favor of the pound and began a new upward move toward the 100.0% corrective level – 1.3586. Thus, on Monday, the upward movement may continue.

The wave situation remains "bearish," as strange as it may sound after the fairly strong growth in recent weeks. The last completed upward wave did not break the peak of the previous one, while the last downward wave did not break the prior low. The news 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 switch back to "bullish."

The news background on Friday was notable for the U.S. currency. Recall that a few weeks ago, the U.S. Producer Price Index showed strong growth, which encouraged many dollar bulls. If producer prices rise, headline inflation can rise too, lowering the likelihood of Federal Reserve policy easing in September. However, on Friday the Personal Consumption Expenditures (PCE) price index showed a standard 0.3% increase, as traders had expected. As a result, the dollar came under market pressure after this report. The situation was worsened by the University of Michigan Consumer Sentiment Index, which dropped in August from 61.7 to 58.2. Other than the Q2 GDP report, the dollar did not have any positive news last week. This week, bears will have chances to attack, as a significant amount of important U.S. economic data is expected. At the moment, no one can say how positive or negative these figures will be. The dollar has some chances, but they remain rather limited.

On the 4-hour chart, the pair performed a second reversal in favor of the pound after another rebound from the 1.3378–1.3435 support zone. Thus, the upward process may continue toward the next correction level of 127.2% – 1.3795. No emerging divergences are observed in any indicator today. A consolidation below the 1.3378–1.3435 zone would work in favor of the U.S. dollar and a decline toward the 76.4% Fibonacci level – 1.3118.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became more "bearish" in the latest reporting week. The number of long positions held by speculators decreased by 5,302, while short positions rose by 866. The gap between longs and shorts is currently 76,000 vs. 107,000. However, as we can see, the pound leans more toward growth, and traders toward buying.

In my view, the pound still faces prospects for decline. The news background in the first six months of the year was disastrous for the U.S. dollar, but it is gradually starting to improve. Trade tensions are easing, key deals are being signed, and the U.S. economy in Q2 will recover thanks to tariffs and various forms of investment. At the same time, expectations of Fed monetary policy easing in the second half of the year have already begun to put serious pressure on the dollar. Therefore, for now, I do not see grounds for a "dollar trend."

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

September 1 – The economic events calendar contains no significant entries. The influence of the news background on market sentiment on Monday will be absent.

GBP/USD Forecast and Trading Advice:

Selling the pair was possible when the hourly chart closed below 1.3482, but this signal proved unprofitable. Buying was possible on Friday upon closing above 1.3482 with a target of 1.3586. These trades can be kept open today.

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