According to the hourly chart, the GBP/USD pair reversed in favor of the British on Wednesday and showed strong growth in the direction of the 1.2315 level. Today, the growth process can be resumed at the same level, but the reasons for the British to grow today are less than yesterday. The report on American inflation caused a stir among traders, but almost a day has passed since its publication. It is unlikely that the British and European economies will continue to grow because of this report on Thursday. I want to note that the data on the consumer price index is very important for the dollar, the Fed, and understanding of the Fed's further actions and monetary policy. But it would be best if you did not overestimate them either. One report is not a guarantee that inflation will now fall every month. Moreover, it can fall fast, slowly, or may not fall at all. Imagine a situation where the following two reports show no decrease or a minimal decrease of 0.1-0.2%.
The Fed will be forced to intervene in what is happening again, and the probability of tightening monetary policy with the greatest steps and pace will increase again. I want to say that yesterday's report is very strong, but it does not mean that traders will now see the same gorgeous figures every month. The next two inflation reports and the next Fed meeting are very important for Americans. We need to understand whether there will now be a tendency for the consumer price index to decline or whether the index will be shocked by the rate increase to 2.5%, but will it slow down further more impressively? The Briton also has yet to prove his aptitude, as a report on GDP in the second quarter will be released on Friday, which may disappoint its fans. There will also be a report on industrial production, but it is less important for traders. Weak statistics in the UK may bring the bears back into the game.
On the 4-hour chart, the pair performed a return to the corrective level of 127.2% (1.2250). A new rebound from this level will work in favor of the US currency and the resumption of the fall towards the level of 1.1980. Closing the pair's rate above the level of 1.2250 will increase the probability of further growth in the direction of the next corrective level of 100.0% (1.2674). Emerging divergences are not observed in any indicator today.
Commitments of Traders (COT) Report:
Over the past week, the mood of the "non-commercial" category of traders has become a little more "bearish." The number of long contracts in the hands of speculators decreased by 5,301 units, and the number of short contracts decreased by 2,882. Thus, the general mood of the major players remained the same – "bearish," and the number of short contracts still exceeded the number of long contracts by several times. The big players remain mostly in the pound sales, and their mood has not changed much lately. The pound itself has shown growth in recent weeks, but COT reports make it clear that the Briton may resume its decline, as the positions of bull traders are in no hurry to improve enough to count on an upward trend.
News calendar for the USA and the UK:
US - number of initial applications for unemployment benefits (12:30 UTC).
On Thursday, the calendars of economic events in the UK and the US contain one uninteresting entry for two. I strongly doubt that the report on unemployment claims will greatly affect the mood of traders. The information background today will be close to "zero."
GBP/USD forecast and recommendations to traders:
I recommend new sales of the British when rebounding from the level of 1.2250 on the 4-hour chart with a target of 1.1980. I recommend buying the British when fixing above the level of 1.2250 on a 4-hour chart with targets of 1.2315 and 1.2432.