On the hourly chart, the GBP/USD pair tried to continue the rally on Tuesday. However, it failed. By late afternoon, the British currency had already fallen to the retracement level of 38.2% (1.3418), as well as to the lower boundary of the uptrend corridor. The pair could now make a close under them in the coming hours, which would allow expectations of a further drop of the British currency towards the Fibonacci level of 23.6% (1.3319). This would indicate that the mood of most traders has changed to bearish. Trading volumes are extremely low at the moment, which is reflected in the weak movements of the pair. The information backdrop at the moment is even weaker than the trading volumes. On Tuesday there were just two or three reports, which could draw the attention of traders. But they were so weak that even in conditions of an empty market they did not influence traders' mood.

Coronavirus and the Omicron strain are still the main problems. Every day the number of cases of omicron in the UK is rising. Yesterday there were reported as many as 130,000 new infections. This is a new anti-record. However, the British authorities are still not taking any measures to slow down the spread of the new virus, merely recommending that people wear masks and work remotely. Secretary of State for Health and Social Care Sajid Javid said the government monitored changes in disease statistics on a daily basis and was ready to react if the situation continues to worsen. But so far, there is no reaction. He added that there would be no new restrictions introduced in England before the New Year. In Wales, Scotland, and Northern Ireland, the authorities have taken some measures to counter Omicron, but these are too weak to stop the spread.

According to the 4-hour chart, the pair reached the correctional level of 50.0% (1.3457). It rebounded from this level, turned in favour of the American currency and started the process of falling towards the Fibonacci level of 61.8% (1.3274). However, the movement is now so weak, as well as the activity of traders, that one can hardly expect the fall of the British pound to 1.3274 level in the coming days. The pair's fixing above the level of 50.0% (1.3457) will be in favor of the pound and will resume the growth towards the next correctional level of 38.2% (1.3642). A bearish divergence is possible near the MACD indicator.

News calendar for US and EU:

On Wednesday, there will be no important economic events in the EU and the US. The information background will have no influence on the mood of traders today.

GBP/USD outlook and tips for traders:

Yesterday I recommended to sell the pound in case there is a rebound from level of 50.0% (1.3457) on the 4-hour chart. You could sell today if a close below the level of 38.2% (1.3418) on the hourly chart with a target of 1.3319 is achieved. I recommend buying the pair if it closes above 1.3457 on the 4-hour chart, as this would indicate a renewal of bullish sentiment among traders. Targets are 1.3497 and 1.3576.