Hello, dear traders! According to the 1-hour chart of GBP/USD, the downtrend continued on Tuesday. The price closed below 1.2342. The downward target is now seen at 1.2238. After consolidation below the ascending trend line, the bears failed to take the market under control. It remains to be seen whether the greenback will go up.

In my view, the dollar may show growth in the coming weeks. The currency has been bearish for several months. Therefore, a correction is needed. However, the upcoming events this week may have a significant influence on market sentiment. The outcome of the Bank of England's meeting may be quite unexpected. Therefore, the pair's future dynamic is now impossible to predict.

The British regulator is expected to raise interest rates by 50 basis points. The move has already been priced in by traders. Therefore, the euro and the pound may both go down only because of their growth in recent months. Taking into account this same fact, I can hardly believe that the uptrend has resumed. However, expectations and assumptions are nothing in comparison to market sentiment. Today, the United Kingdom will see the release of its manufacturing PMI, but it will hardly spark interest in traders. Chart analysis, which shows us a potential price movement, will be irrelevant in the next few days. Trading activity may increase significantly, and the pair may reverse quickly and frequently.

In the 4-hour time frame, a bearish reversal occurred. The price headed down toward the 121.2% retracement level of 1.2250. The MACD shows an impending bullish divergence, which allows us to expect a bullish reversal. The quote may then return to the level of 1.2441. However, in the 4-hour time frame, the pair keeps moving in the 1.2250–1.2441 sideways corridor.

Commitments of Traders:

The bearish sentiment of non-commercial traders decreased last week. Speculators closed 6,713 long positions and 7,476 short positions. Overall, sentiment is still bearish with a wide gap between shorts and longs. Although the pound has limited growth potential now, it is in no rush to go down. In the 4-hour time frame, the pair left the limits of the 3-month ascending corridor, which may become a restraining factor for a bullish continuation.

Macroeconomic calendar:

United Kingdom – Manufacturing PMI (09-00 UTC).

United States – ISM Manufacturing PMI (15-00 UTC); Fed Interest Rate Decision (19-00 UTC); FOMC Press Conference (19-30 UTC).

Today, fundamental factors may have a significant influence on market sentiment in the second half of the day.

Outlook for GBP/USD:

It will become possible to open short positions if the pair settles below 1.2342 in the 1-hour time frame, with the target at 1.2238. Positions could be closed when the first macro reports in the United States are delivered. Meanwhile, if the pair rebounds from 1,2250 in the 4-hour time frame, it will become possible to buy the instrument. The target stands at 1.2432.