On the hourly chart, the GBP/USD pair on Wednesday fell to the 23.6% Fibonacci retracement level at 1.3313. A rebound from this level led to a reversal in favor of the pound and some upward movement. On Thursday morning, a new downward move continued toward the 1.3313 level. A new rebound from this level may once again trigger a reversal in favor of the pound and a modest rise toward the 50.0% Fibonacci level at 1.3387. A consolidation of the pair's rate below 1.3313 will increase the likelihood of further decline toward the next corrective level of 0.0% – 1.3247.

The wave structure turned "bullish" almost overnight. The last completed downward wave broke the previous low, but the most recent upward wave also broke the previous high. In recent weeks, the fundamental backdrop has been negative for the US dollar, but bullish traders have not been taking advantage of the opportunities for an advance. Now, they are starting to spread their wings—but doing so very slowly and uncertainly.

On Wednesday morning, the UK released its September inflation report, which came as quite a surprise. Traders had become used to inflation rising in Britain, but this time the figure remained unchanged compared to the previous month — 3.8% year-on-year. Core inflation even declined from 3.6% to 3.5%, against expectations of a rise to 3.7%.

As a result, there are now some chances of seeing another round of monetary policy easing by the Bank of England before the end of the year, which triggered a sharp attack by the bears. I don't believe the new bearish push will last long, but on Friday, the US inflation report will be released — and if it comes in higher than market expectations, it could further support the bears.

The US dollar still lacks strong reasons to rise, yet it continues to seize every opportunity to gain a little more strength. Bulls, meanwhile, remain extremely passive. On Thursday, there is no notable fundamental background. Next week — Federal Reserve meeting.

On the 4-hour chart, the pair reversed in favor of the pound after forming a bullish divergence on the CCI indicator and rose to the 100.0% corrective level at 1.3435. A rebound from this level favored the US currency, leading to a new decline toward 1.3339. A rebound from 1.3339 will allow traders to expect a new rise in the pair, while consolidation below this level will signal further decline. No emerging divergences are observed today on any indicator.

Commitments of Traders (COT) Report

The sentiment of the Non-commercial (speculative) traders became more bullish in the latest reporting week. The number of long positions increased by 3,704, while the number of short positions decreased by 912. The gap between long and short positions now stands at approximately 85,000 vs. 86,000. Bullish traders are once again tipping the balance slightly in their favor.

In my view, the pound still faces prospects for further decline, but with each passing month, the US dollar looks weaker and weaker. If traders once worried about Donald Trump's protectionist policies, uncertain of their outcome, they may now be concerned about the consequences of those policies: potential recession, the constant introduction of new tariffs, and Trump's conflict with the Federal Reserve, which could lead the regulator to become politically dependent on the White House. Thus, the pound already appears much less risky than the US currency.

News Calendar for the US and the UK

October 23 – the economic calendar contains no significant events.

The information background will therefore have no impact on market sentiment for the rest of the day.

Forecast for GBP/USD and Trading Recommendations

I cannot recommend selling the pair today, as I believe the trend has shifted to bullish. Buying can be considered on a rebound from the 1.3313 level or upon closing above the resistance level of 1.3354–1.3357, with targets at the nearest corrective levels.

Fibonacci grids are drawn between 1.3526–1.3247 on the hourly chart and 1.3431–1.2104 on the 4-hour chart.