On the hourly chart, GBP/USD rebounded from the 100.0% retracement level at 1.3556 on Tuesday, reversed in favor of the US dollar, and resumed its decline. On Wednesday morning, the pound is trading near the 76.4% Fibonacci level at 1.3489. A rebound from this level would favor the pound and allow for some recovery toward 1.3556. Consolidation below 1.3489 would suggest a further decline toward the next retracement level of 61.8% at 1.3447.

The market situation remains bullish. The last completed upward wave broke above the previous peak, while the new downward wave has not yet broken below the previous low. Thus, the bulls currently hold the initiative in the market, and their advantage remains substantial. The bullish trend can only be considered broken after the low of the last completed wave is breached, i.e., below 1.3414, or after two downward waves have formed.

The fundamental background on Tuesday was quite conducive to a decline in the US dollar. The US ISM Manufacturing PMI came in at 54.6, compared with a forecast of 55.2. The JOLTS report also came in below traders' expectations. Thus, the bulls could have continued their counterattack and worked to preserve the trend. However, following last Friday, bullish sentiment clearly deteriorated, and the market returned to the idea of FOMC monetary policy tightening in September. Thus, the dollar is currently rising largely because the market once again expects the Fed to raise interest rates. Today, the ADP employment report will be released in the United States. Although it is not the most important labor market report, every indicator is important at present. Any report on employment, unemployment, or job openings could halt the bears' advance, as they once again believe that the FOMC will raise rates. However, the Nonfarm Payrolls report on Friday will be of key importance. The annual figure was revised down by 80,000 last Friday, but now only the August result matters.

On the 4-hour chart, GBP/USD consolidated below the 23.6% retracement level at 1.3538. Thus, the decline is continuing toward the next Fibonacci level of 38.2% at 1.3467. A rebound from the 1.3467–1.3482 support level would allow for some growth, while consolidation below the zone would suggest a further decline toward 1.3409. A bullish divergence is developing on the CCI indicator, increasing the chances of a rebound from the 1.3467–1.3482 level.

Commitments of Traders (COT) Report:

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 16,269, while the number of Short positions increased by 6,220. The current gap between the numbers of Long and Short positions is essentially 93,000 versus 1,382,000. The gap and the bears' advantage are gradually narrowing, although the bears' advantage remains substantial. Previously, the bears' dominance raised no questions, but it does now because the fundamental background has changed.

I still do not believe that the pound is in a bearish trend, 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 shifted toward expectations of peace, but negotiations between Iran and the United States failed without really getting started. And there is no guarantee that they will resume in the near future. The Fed's position on monetary policy remains contradictory.

News calendar for the United States and the United Kingdom:

• United States – ADP employment change (12:00–15:00 UTC).

On September 2, the economic events calendar contains one secondary release. The impact of the fundamental background on market sentiment on Wednesday will be extremely weak or nonexistent.

GBP/USD forecast and trading tips:

Selling the pair was possible after consolidation below the 1.3633–1.3641 level on the hourly chart and a rebound from 1.3556. These trades can currently be kept open with targets at 1.3489 and 1.3447. Buying opportunities may arise today if the pair rebounds from 1.3489, with targets at 1.3526 and 1.3556.

The Fibonacci grids are drawn from 1.3557–1.3272 on the hourly chart and from 1.3158–1.3655 on the 4-hour chart.