On the hourly chart, GBP/USD continued to decline on Tuesday, but toward the evening it reversed in favor of the pound and returned to the 100.0% Fibonacci level at 1.3272. A rebound from 1.3272 would allow traders to expect a resumption of the decline toward the 1.3164–1.3177 support level. Consolidation above 1.3272 would increase the likelihood of further growth toward the correction level at 1.3368.

The market situation remains bearish. The last completed upward wave failed to break the previous peak, while the new downward wave, which is still forming, broke the previous low. Thus, the bears now have the initiative. The tightening of FOMC monetary policy and the hawkish outlook conveyed by Kevin Warsh sharply strengthened the dollar's position. A reversal of the current trend is now possible only above 1.3567 or after the formation of two bullish waves.

There was limited fundamental news on Tuesday, apart from the US JOLTS report on job openings, which came in below expectations but attracted little attention from traders. However, the final UK second-quarter GDP report was released this morning, showing annual growth of 1.4% against a forecast of 1.2%. As a result, the British pound gained slightly following the report, but the prospects for further growth remain uncertain, given that the dollar has been rising almost every day for nearly a month. Important reports scheduled for the beginning of each month are starting to be released in the US, and these reports could theoretically support the British pound. However, they could also support the US dollar. For the pound to have a chance of recovering, bullish traders need to overcome at least the 1.3272 level. Important US GDP and PCE inflation reports will be released today, so attention should be focused on these data.

On the 4-hour chart, GBP/USD returned to the 76.4% correction level at 1.3277. A rebound from this level would again allow traders to expect a decline toward the 100.0% Fibonacci level at 1.3159. Consolidation above 1.3277 would increase the likelihood of further recovery in the pound toward the 61.8% corrective level at 1.3348. No emerging divergences are currently observed.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became even more bearish over the latest reporting week. The number of Long positions held by speculators decreased by 14,876, while the number of Short positions increased by 8,977. The gap between Long and Short positions is currently approximately 54,000 versus 137,000. The gap and the bears' advantage are increasing again. Previously, the bears' dominance was not in question, but now it is, as the fundamental backdrop has changed in recent months.

I still do not believe in a bearish trend for the pound, but in the near term, everything will depend on Trump's trade policy, the monetary policies of the Fed and the Bank of England, as well as the duration, scale, and consequences of the war in the Middle East. In recent months, the market had shifted toward expectations of peace, but negotiations between Iran and the US failed before they had properly begun. It is also uncertain whether they will resume in the near future.

News Calendar for the US and UK:

• US – ADP Employment Change (12:30 UTC).
• US – Second-quarter GDP Change (12:30 UTC).
• US – Personal Income and Spending (12:30 UTC).

The September 30 economic calendar contains three releases. The economic backdrop could affect market sentiment during the second half of Wednesday's trading session, but the impact is unlikely to be strong.

GBP/USD Forecast and Trading Tips:

Selling the pair is possible today following a rebound from 1.3272 on the hourly chart, with a target of 1.3177. Buying is possible today if the pair consolidates above 1.3272, with a target of 1.3368.

The Fibonacci levels are drawn from 1.3272 to 1.3674 on the hourly chart and from 1.3158 to 1.3655 on the 4-hour chart.