On the hourly chart, the GBP/USD pair on Monday made two rebounds from the 76.4% retracement level at 1.3425, turned in favor of the pound, and rose to the 61.8% Fibonacci level at 1.3482. A rebound of quotes from this level would allow for a reversal in favor of the U.S. dollar and a return to 1.3425. A consolidation of the pair's rate above 1.3482 will increase the likelihood of further growth toward the levels of 1.3528 and 1.3574.

The wave situation remains "bearish." The last completed downward wave broke the previous low, while the last upward wave did not break the previous peak. Over the past week, the news background has been negative for the U.S. dollar, but bullish traders have not yet taken advantage of the opportunities to advance. To cancel the "bearish" trend, the pair needs to rise above 1.3528.

On Monday, there was no news background for the pound. Bank of England Governor Andrew Bailey did not touch on monetary policy in his speech, and no other significant news occurred during the day apart from the political crisis in France. I note that for the pound, the French political crisis means nothing, since the UK has left the EU. Thus, GBP/USD traded sideways all day, confined between 1.3425 and 1.3482. Within this range, trading on rebounds is quite possible, while one can only count on a trend after the price exits the restricted zone. Since the "bearish" trend has not yet been canceled, a new decline remains possible. The news background is difficult to interpret in favor of the bears, but over the past week and a half, we can see that the bulls are not ready for a new offensive. Bears may continue to take advantage of this. Today, again, no interesting events are expected in either the UK or the US. Thus, the pound may continue trading between 1.3425 and 1.3482 today.

On the 4-hour chart, the pair rebounded from the 1.3339 level and turned in favor of the British pound. Consolidation above the 100.0% Fibonacci level at 1.3435 allows for expectations of continued growth toward the 127.2% retracement level at 1.3795. No emerging divergences are seen today on any indicator. A new decline in the pound could be expected after consolidation below 1.3339.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" category of traders became more "bullish" in the last reporting week. The number of long positions held by speculators increased by 3,704, while the number of shorts decreased by 912. The gap between the number of longs and shorts is now essentially the following: 85,000 versus 86,000. Bullish traders are once again tipping the scales in their favor.

In my view, the pound still faces prospects for decline, but with each passing month the U.S. dollar looks weaker and weaker. Whereas previously traders worried about Donald Trump's protectionist policies without fully understanding what results they might bring, now they may worry about the consequences of these policies: a possible recession, the constant introduction of new tariffs, Trump's fight against the Federal Reserve, which could result in the regulator becoming "politically controlled" by the White House. Thus, the pound now looks much less risky than the U.S. currency.

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

On October 7, the economic events calendar contains no important entries. The news background will have no influence on market sentiment on Tuesday.

Forecast for GBP/USD and advice to traders:

Sales of the pair were possible on a rebound from the 1.3482 level with targets at 1.3425 and 1.3357 on the hourly chart. New sales – if the pair closes below 1.3425, with targets at 1.3332–1.3357. Purchases could be considered on a rebound from 1.3425 with targets at 1.3482 and 1.3528. The first target has already been worked out. New purchases – on a fresh rebound from 1.3425.

The Fibonacci grids are built from 1.3332–1.3725 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.