On the hourly chart, the GBP/USD pair on Monday consolidated above the 161.8% retracement level at 1.3520. Thus, the pound's upward movement may continue today and throughout the week toward the next level at 1.3620, especially in the case of a rebound from this level from above. Consolidation below 1.3520 would suggest a reversal in favor of the US dollar and a potential decline toward 1.3425.

The wave structure clearly points to the continuation of the bullish trend. The last upward wave broke through the previous peak, and the last downward wave did not break the previous low. Bulls may find it difficult to rely on further growth without new announcements from Donald Trump regarding tariff hikes or new import duties, but the US president seems determined to continue escalating the trade war with China. Therefore, bulls have reasons for new attacks this week.

On Monday, the UK's Manufacturing PMI for May came in at 46.4 points. Although low, it was still better than traders had expected. Meanwhile, the US Manufacturing PMI was below forecasts (only 52.0 points), and the ISM Manufacturing Index came in at 48.5, significantly worse than expected. Thus, even without new tariff hike news from the US, the bears had every reason to retreat on Monday. Recently, the news background for the dollar has deteriorated again, as minor signs of the end of the trade war have not led to any tangible results. No trade agreements are in sight, the trade war with China may reverse from de-escalation, tariffs are being raised again, and there is no news about negotiations with China or the European Union. Traders have no reason to change their trading strategies, which have been working well for several months.

On the 4-hour chart, the pair consolidated above the 100.0% Fibonacci level at 1.3435 and rebounded from it from above. Thus, the growth process may continue toward the next retracement level at 127.2% — 1.3795. No emerging divergences are observed on any indicator today. The bullish trend still raises no doubts, but a close below 1.3435 would suggest a decline toward the 76.4% retracement level at 1.3118.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became much more bullish over the last reporting week. The number of Long positions held by speculators increased by 14,247, while the number of Short positions rose by only 2,861 units. Bears have long since lost their advantage in the market. The gap between the number of Long and Short positions now stands at 35,000 in favor of the bulls: 102,000 versus 67,000.

In my view, the pound still has downside prospects, but recent developments are shifting the market's long-term outlook. Over the past three months, the number of Long positions has risen from 65,000 to 102,000, while Short positions have decreased from 76,000 to 67,000. Under Donald Trump, confidence in the dollar has been shaken, and COT reports show that traders have little appetite for buying the dollar. Thus, regardless of the overall news background, the dollar continues to decline due to events surrounding Donald Trump.

Economic Calendar for the US and UK:

• USA – JOLTS Job Openings (14:00 UTC).

On Tuesday, the economic calendar contains only one entry. The impact of the news background on traders' sentiment may be very weak today.

GBP/USD Forecast and Trading Recommendations:

Sales of the pair are possible today if it closes on the hourly chart below 1.3520 with a target at 1.3425. Purchases are possible on a rebound from 1.3520 on the hourly chart with a target at 1.3620.

Fibonacci grids are built from 1.3205–1.2695 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.