On the hourly chart, the GBP/USD pair continued its decline on Wednesday after consolidating below the 1.3526–1.3539 support level and returned to the 1.3437–1.3470 level, where it has been hovering for several weeks. A consolidation below this zone would favor a continuation of the decline toward the next support level at 1.3352–1.3362 and would result in a shift of the trend to bearish. A rebound from the 1.3437–1.3470 level would support the British currency and trigger some growth toward the 1.3526–1.3539 level.

The wave structure remains bullish. The most recently completed downward wave failed to break the previous low, while the new upward wave surpassed the previous high. The news background for the pound has been weak in recent weeks, but the U.S. news backdrop also leaves much to be desired. At the beginning of the new year, bulls feel confident and are barely reacting to negative factors. A break of the bullish trend would occur below the 1.3403 level.

Wednesday's news flow was the second "test" of the week for the U.S. dollar. Recall that on Monday, the ISM Manufacturing PMI was released and disappointed the dollar. Yesterday, the ISM Services PMI exceeded traders' expectations, but at the same time, the ADP and JOLTS reports showed negative dynamics. The number of job openings in the U.S. for November totaled just 7.146 million versus forecasts of 7.6 million. ADP employment increased by 41,000, compared with expectations of 47,000–50,000. Business activity is an important indicator, but labor market reports matter more to traders. Strangely enough, the dollar found support, and bears continued to attack. However, the trend remains bullish, and on Friday the U.S. currency will face its third exam—Nonfarm Payrolls and the unemployment rate. This exam will be the final and decisive one for the dollar.

On the 4-hour chart, the pair has pulled back to the 1.3369–1.3435 support level. A rebound from this area would again favor the pound and a resumption of growth toward the next Fibonacci level at 127.2% (1.3795). A consolidation below the 1.3369–1.3435 level would allow traders to expect a reversal in favor of the U.S. dollar and a decline toward the 1.3118–1.3140 support level. The ascending trend channel indicates that the bullish trend remains intact. No emerging divergences are observed at this time.

Commitments of Traders (COT) Report

Sentiment among non-commercial traders became more bullish over the latest reporting week. The number of long positions held by speculators increased by 1,572, while short positions decreased by 5,727. The gap between long and short positions currently stands at approximately 63,000 versus 105,000. Bears have dominated in recent months, but the pound appears to have exhausted its downward potential. At the same time, the situation with euro contracts is the exact opposite. I still do not believe in a bearish trend for the pound.

In my view, the pound still looks less "dangerous" than the dollar. In the short term, the U.S. currency may occasionally enjoy demand in the market, but not in the long term. Donald Trump's policies have led to a sharp deterioration in the labor market, forcing the Fed to ease monetary policy in order to curb rising unemployment and stimulate job creation. For 2026, the FOMC does not plan aggressive monetary easing, but at this point no one can be confident that the Fed's stance will not shift toward a more dovish position during the year.

News Calendar for the U.S. and the U.K.

U.S. – Initial Jobless Claims (13:30 UTC)

On January 8, the economic calendar contains just one entry, which cannot be considered important. The impact of the news background on market sentiment on Thursday will be minimal.

GBP/USD Forecast and Trading Tips

Selling the pair was possible after a close below the 1.3526–1.3539 level on the hourly chart, with a target at 1.3470. This target has been reached. New sell positions can be considered after a close below the 1.3437–1.3470 level, targeting 1.3352–1.3362. Buy positions may be considered today on a rebound from the 1.3437–1.3470 support level on the hourly chart, with a target at 1.3526–1.3539.

Fibonacci grids are drawn from 1.3470–1.3010 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.