On the hourly chart, GBP/USD continued to rise on Friday after rebounding from the 1.3164–1.3177 support level. However, at the end of the day, the pair reversed in favor of the US dollar and began moving back toward 1.3164–1.3177. Another rebound from this zone would again favor the pound and allow for some growth toward the 100.0% Fibonacci level at 1.3272. Consolidation below the 1.3164–1.3177 support level would increase the probability of a continued decline toward the next retracement level of 161.8% at 1.3025.

The market situation remains fully bearish. The latest completed upward wave failed to break the previous peak, while the new downward wave, which is still forming, broke the previous low. Therefore, sellers continue to control the market. FOMC monetary policy tightening and the hawkish outlook conveyed by Kevin Warsh significantly strengthened the US dollar. A reversal of the current trend is now possible only above the 1.3567 level or after the formation of two bullish waves.

The news background on Friday provided an opportunity for buyers to strengthen their positions, but they once again failed to take advantage of it. I would like to remind you that the US labor market and unemployment data were significantly weaker than expected, substantially reducing the FOMC's hawkish stance. The market also largely abandoned expectations of Fed monetary policy tightening in October. Nevertheless, this had no significant impact on the US dollar. Last week, Bank of England Governor Andrew Bailey also said that it would be difficult for the central bank to keep the interest rate at its current level because inflationary pressures are increasing, while the conflict in the Middle East remains unresolved. Energy prices remain consistently high, and recent developments in the Middle East could push them even higher. Bailey also said that the central bank would not wait for higher oil and gas prices to fully affect inflation, which suggests that the Bank of England could tighten monetary policy as early as its next meeting. However, this hawkish information also failed to support the pound or buyers.

On the 4-hour chart, GBP/USD returned to the 76.4% retracement level at 1.3277 and rebounded from it once again. Therefore, the pound's decline may continue toward the 100.0% Fibonacci level at 1.3159. A rebound from this level would allow the pound to recover somewhat, but the hourly chart shows a support zone above 1.3159 that could also stop further selling pressure. Another bullish divergence has formed on the CCI indicator.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became even more bearish over the latest reporting week. The number of Long positions held by speculators decreased for the fifth consecutive week, falling by 13,059, while the number of Short positions declined by only 4,552. The current difference between the number of Long and Short positions is approximately 41,000 versus 132,000. The sellers' advantage is increasing again. Previously, the dominance of sellers was not in question, but this is now less clear because the fundamental background has changed over the past few months.

I still do not expect a sustained bearish trend for the pound, but in the near term, everything will depend on Trump's trade policy, the monetary policies of the Fed and the Bank of England, as well as the duration, scale, and consequences of the war in the Middle East. In recent months, the market has adjusted its expectations toward a peaceful resolution, but negotiations between Iran and the United States failed before making meaningful progress. It is also uncertain whether they will resume in the near future.

US and UK Economic Calendar:

• US – ISM Services PMI (14:00 UTC).

The economic calendar for October 5 contains one event that can be considered important. Economic data will influence market sentiment during the second half of Monday's trading session.

GBP/USD Forecast and Trading Recommendations:

Short positions can be considered today if the pair consolidates below the 1.3164–1.3177 level on the hourly chart, with a target of 1.3025. Long positions can be considered today if the pair rebounds from the 1.3164–1.3177 level, with a target of 1.3272.

The Fibonacci grids are drawn from 1.3272–1.3674 on the hourly chart and from 1.3158–1.3655 on the 4-hour chart.