On the hourly chart, the GBP/USD pair on Tuesday reversed in favor of the British pound and closed above the resistance zone of 1.3344–1.3357. Therefore, a rebound from this zone today could again lead to an upward movement toward the 1.3425 level. However, a consolidation below this zone would support the U.S. dollar and resume the decline toward the 100.0% Fibonacci level at 1.3205. Based on recent wave activity, the pair is currently in a sideways trend.

The wave structure remains simple and clear. The last completed upward wave broke the previous peak, while the new downward wave failed to break the last low. This suggests the bullish trend remains intact, although it is more horizontal than upward. Thus, it will be difficult for the bulls to push the price beyond 1.3425 without new announcements from Donald Trump about imposing or increasing import tariffs.

There was no significant news background on Tuesday, but later today, the FOMC will announce the results of its two-day meeting. I believe that amid global uncertainty, the Fed will leave monetary policy parameters unchanged. Jerome Powell has recently mentioned the possibility of inflation rising due to the trade war. Since controlling inflation remains the regulator's key objective, there is no reason to lower interest rates just yet.

However, in the second half of the year, the Fed may shift from prioritizing price stability to focusing on the broader state of the economy—especially if no major trade agreements are signed soon. The U.S. economy has already begun to slow after a sharp drop in Q1, and this might force the Fed to adjust monetary policy accordingly. As such, we may see rate cuts later in the year, and Powell could hint at this during today's press conference. If that happens, bulls may launch a new offensive.

The latest Commitments of Traders (COT) report showed a shift toward a more bullish sentiment. The number of long positions held by speculators decreased by 2,957, while short positions dropped by 6,426. This caused bears to lose their advantage. The gap between long and short positions is now 24,000 in favor of the bulls: 91,000 vs. 67,000.

In my view, while GBP still has downside potential, recent developments could prompt a long-term market reversal. Over the past three months, long positions increased from 80K to 91K, while short positions fell from 80K to 67K. More notably, in the past 14 weeks—coinciding with "Trump's 14 weeks in charge"—long positions rose from 59K to 91K, and shorts declined from 81K to 67K.

News Calendar for the U.S. and UK (May 8)

• U.S. – FOMC Interest Rate Decision (18:00 UTC)
• U.S. – FOMC Press Conference (18:30 UTC)

These are major events that may significantly influence market sentiment, particularly in the second half of the day.

GBP/USD Forecast and Trading Recommendations

Sell the pair today if the hourly chart closes below the 1.3344–1.3357 zone, targeting 1.3265 and 1.3205. Buy the pair if it rebounds from the 1.3344–1.3357 zone on the hourly chart, targeting 1.3425.

Note: In the evening, market sentiment will be shaped primarily by the news backdrop, which may override technical signals.

Fibonacci grids:

• Hourly chart: 1.3205–1.2695
• 4-hour chart: 1.3431–1.2104