On the hourly chart, the GBP/USD pair continued to decline on Thursday toward the 1.3164–1.3177 support level after consolidating below the 100.0% Fibonacci level at 1.3272. A rebound from the 1.3164–1.3177 support level would favor the pound and some growth toward the 1.3272 level. Consolidation below the 1.3164–1.3272 support level would allow for a continuation of the decline toward the next retracement level of 161.8% at 1.3025.

The market situation remains bearish. The latest 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. FOMC monetary policy tightening and the hawkish outlook conveyed by Kevin Warsh have sharply strengthened the dollar's position. A break in the current trend is now possible only above 1.3567 or after two bullish waves have formed.

The fundamental backdrop on Thursday allowed the bears to take a pause, but they once again chose not to do so. There have been enough events this week that could have halted the bears' advance, yet the bulls remain silent. Perhaps Friday will at least prove corrective, and traders will forget about FOMC monetary policy tightening for a moment. There are simply no other opportunities for the pound to rise. Thus, the British pound has long been due for a correction, but this correction has yet to begin. However, in my view, the more strongly the dollar rises now, the more sharply it will subsequently decline. I still do not see serious grounds for a three-week decline, even despite the Fed's policy tightening. I would like to remind readers that the Bank of England is also prepared to raise interest rates, while the geopolitical backdrop has eased somewhat this week, which should have reduced demand for safe-haven assets. At the same time, U.S. Treasury yields are setting new 20-year highs almost every day, putting pressure on the U.S. budget.

On the 4-hour chart, the GBP/USD pair consolidated below the 76.4% retracement level at 1.3288, allowing traders to expect a continuation of the decline toward the next Fibonacci level of 100.0% at 1.3159. A rebound from 1.3159 would allow for a reversal in favor of the pound and some growth toward 1.3277. A bullish divergence is developing in the CCI indicator.

Commitments of Traders (COT) Report:

The sentiment of the Non-commercial trader category did not change during the latest reporting week and remains bearish. The number of Long positions held by speculators decreased by 4,189, while the number of Short positions decreased by 4,310. The current gap between Long and Short positions is effectively 69,000 versus 128,000. The gap and the bears' advantage are gradually narrowing, but the bears still retain a substantial advantage. Previously, the bears' dominance raised no questions, but now it does, as the fundamental backdrop has changed.

I still do not believe in the bearish trend in 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 has adjusted its expectations toward peace, but negotiations between Iran and the United States failed before they had properly begun. Nor is it certain that they will resume in the near future.

News Calendar for the United States and the United Kingdom:

• United States – Change in Durable Goods Orders (12:30 UTC).
• United States – University of Michigan Consumer Sentiment Index (14:00 UTC).

On September 25, the economic calendar contains two entries, of which I would highlight only the report on durable goods orders. The economic backdrop may influence market sentiment in the second half of Friday's trading session.

GBP/USD Forecast and Trading Tips:

Sell trades were possible after consolidation below 1.3272 on the hourly chart, with a target of 1.3177. These trades can be kept open. Buy trades are possible today after a rebound from the 1.3164–1.3177 level, with a target of 1.3272.

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