On the hourly chart, GBP/USD continued its upward movement on Friday, closing near the resistance zone of 1.2611–1.2620. A rejection from this zone may lead to a reversal in favor of the U.S. dollar, pushing the pair back toward the Fibonacci 61.8% level at 1.2538. Conversely, a breakout above 1.2611–1.2620 would increase the probability of further pound appreciation.

The wave structure is fairly clear. The last downward wave did not break the previous low, while the latest upward wave exceeded the previous peak. This suggests that a bullish trend is still forming. However, wave sizes have varied significantly, making it uncertain whether this bullish movement will last for another few weeks. Nevertheless, the pound showed strong growth last week, which cannot be ignored.

On Friday, the British pound did not receive the same level of support as the euro. The key difference was the lack of a strong GDP report for the UK. Instead, traders only had U.S. industrial production and retail sales data to analyze. While the industrial production report was weak, retail sales were strong, providing mixed signals.

From a fundamental standpoint, there was no clear reason for GBP/USD bulls to dominate, yet the pound continued to rise. This persistent upward movement raises concerns. This week, several important UK economic reports are due, including inflation data, which could significantly influence the pound.

Additionally, Donald Trump remains a wildcard. In just one month, he has introduced and revoked multiple tariffs, keeping markets on edge. Traders remain uncertain about the timing and targets of his next policy decisions, which adds to overall market volatility and risk.

The GBP/USD pair remains within the resistance zone of 1.2565–1.2620. If bullish traders continue to push the pair higher without fundamental support, the pound could rise to unexpected levels. However, the current market fundamentals do not support a continued rally.

Given this uncertainty, technical analysis plays a more significant role in decision-making. Traders should focus on price action around key support and resistance levels before making trading decisions.

Commitments of Traders (COT) Report

The Non-commercial trader sentiment has become less bearish over the last reporting week. Long positions increased by 3,645 and short positions decreased by 4,510. Although bulls have lost their dominance, bears have not strengthened significantly either.

• Total long positions: 69,000
• Total short positions: 72,000

This suggests a slight advantage for bearish traders, but no major shift in momentum.

Over the past three months, long positions dropped from 120,000 to 69,000 short positions remained nearly unchanged, from 75,000 to 72,000.

This data suggests that institutional traders are gradually reducing long positions or increasing shorts. Since all potential bullish catalysts have already played out, a downward correction remains likely despite the recent price increase.

Economic Calendar for the UK & U.S.

Monday:

• No major economic events scheduled.
• Market sentiment will likely be driven by technical factors rather than fundamental data.

GBP/USD Forecast & Trading Recommendations

• Short Positions: Consider selling GBP/USD if the pair rejects the resistance zone at 1.2611–1.2620, with targets at 1.2538 and 1.2508.
• Long Positions: Buying opportunities were previously available above the 1.2363–1.2370 zone, targeting 1.2488–1.2508. Since the target has been reached, new long positions are not currently recommended.

Fibonacci Levels:

• Hourly Chart: Built from 1.2809 to 1.2100
• 4-Hour Chart: Built from 1.2299 to 1.3432