GBP/USD – November 12: GDP Data Fails to Support the Pound

On the hourly chart, GBP/USD consolidated below the 38.2% Fibonacci retracement level at 1.3342 yesterday and declined to the 23.6% Fibonacci level at 1.3263. A rebound from 1.3263 would favor the pound and could lead to some upward movement toward 1.3342. A consolidation below 1.3263 would increase the likelihood of further declines toward the next level at 1.3177.

The market situation has turned bearish. The latest completed upward wave failed to break above the previous peak, while the new downward wave broke below the previous low. As a result, bears have temporarily gained control of the market. The market has already priced in the FOMC's monetary policy tightening in the near term, while expectations of further Bank of England tightening are only beginning to build. A resumption of the pound's upward movement is expected after the corrective pullback is complete.

There was no significant news flow on Wednesday, but bears continued to exert selling pressure. The US inflation report, which showed a reading just 0.1 percentage points above traders' expectations on a month-over-month basis, continued to influence market movements for two days. This is both unusual and paradoxical.

This morning, traders were presented with another paradox. UK GDP increased by 0.7% quarter over quarter and 1.9% year over year compared with the second quarter. These figures indicate that the UK economy is gaining momentum, allowing the Bank of England to take a more decisive approach to combating high inflation. In other words, they increase the likelihood of several additional rounds of monetary policy tightening in 2027.

It is worth recalling that, driven by rising expectations of FOMC monetary policy tightening, the market has been consistently buying the dollar throughout the second half of 2026. However, the pound is reacting somewhat differently to similar developments. Today, for example, it showed virtually no appreciation. This is the paradox. At present, bears remain in control. Although there are no clear fundamental reasons for another round of selling, they still appear sufficiently willing to push GBP/USD lower.

On the 4-hour chart, GBP/USD declined to the 23.6% Fibonacci retracement level at 1.3265. A rebound from this level would favor the pound and could lead to some upward movement toward the 38.2% Fibonacci level at 1.3342. Consolidation below 1.3265 would signal a continuation of the decline toward the 0.0% retracement level at 1.3137. The CCI indicator is approaching a bullish divergence, which could halt the pair's decline.

The sentiment of the Non-commercial trader category became less bearish over the latest reporting week. The number of Long positions held by speculators increased by 7,135, while the number of Short positions decreased by 12,458. The current gap between Long and Short positions stands at approximately 64,000 versus 124,000, respectively. The bears' advantage remains substantial and continues to widen over time. Previously, bearish dominance was unquestionable, but the situation has become less clear as the fundamental background has changed in recent months.

The bearish trend in the pound is still not considered convincing. However, developments in the near future will depend on Trump's trade policy, the monetary policies of the Federal Reserve and the Bank of England, as well as the duration, scale, and consequences of the war in the Middle East.

Over the past few months, the market has adjusted its expectations toward a more peaceful outlook, but negotiations between Iran and the United States remain extremely difficult. Whether Washington and Tehran will ultimately reach an agreement remains uncertain. Any escalation in geopolitical tensions could once again increase demand for the dollar.

On November 12, the economic calendar contains four events, with particular attention focused on UK GDP. Economic data could influence market sentiment throughout Thursday's trading session.

Selling opportunities arose following a rebound from the 1.3454–1.3469 level on the hourly chart, with targets at 1.3404 and 1.3342. Both targets were reached. Further selling opportunities emerged following a close below 1.3342, with a target of 1.3263. This target was also reached.

Today, the pound can be sold following a close below 1.3263, with a target of 1.3177. Buying opportunities may arise following a rebound from 1.3263, with a target of 1.3342.

The Fibonacci retracement levels are drawn from 1.3674 to 1.3136 on the hourly chart and from 1.3674 to 1.3137 on the 4-hour chart.