On the hourly chart, the GBP/USD pair continued its downward movement on Thursday and extended its decline into Friday. Today, the pair has reached the 1.2517 level, where the decline may temporarily pause. Bearish traders are aggressively selling the pound, disregarding the significance of incoming data. A rebound from the 1.2517 level could signal the start of a long-awaited correction.

The wave pattern is clear. The most recent completed upward wave failed to break the peak of the previous wave, while the ongoing downward wave has already broken two prior lows. This confirms the continuation of the bearish trend. For signs of a reversal, the pair must return to the 1.2710 level and close above the last peak.

On Thursday, there was little in the way of market-moving information for the pound, but this did not hinder the bears. They continued to sell the British currency. The sell-off intensified this morning when the UK released disappointing reports on business activity and retail sales. Retail trade volumes in October fell by 0.7%, worse than the forecasted -0.3%. The services PMI dropped from 52 to 50, and the manufacturing PMI declined from 49.9 to 48.6. These figures further accelerated the pound's downward momentum.

The US reports have yet to be released, but the pound has already fallen by 90 points. The decline may continue into the afternoon when three key US economic reports are scheduled for release. Similar data earlier today drove nearly a 100-point move, so further volatility is expected. In my view, the pound's decline is entirely justified. As I've noted in the "Commitments of Traders" section before, the pound's value should be lower than it was a month or two ago.

On the 4-hour chart, the pair successfully broke below the 1.2620 and 1.2565 levels, paving the way for a further decline toward the next support at 1.2450. At this time, there are no signs of a bearish retreat. Regularly forming bullish divergences appear to have little impact on traders in the current environment.

Commitments of Traders (COT) Report:

The sentiment among "Non-commercial" traders became more bullish during the latest reporting week. The number of long positions held by speculators decreased by 745, while the number of short positions fell by 11,711. Despite these changes, bulls still maintain a significant advantage, with the gap between long and short positions standing at 56,000: 120,000 longs versus 64,000 shorts.

In my opinion, the outlook for the pound remains bearish, and the COT reports suggest a strengthening of bearish positions. Over the past three months, the number of Long positions has increased from 102,000 to 120,000, while the number of shorts has risen from 55,000 to 64,000. Professional traders are likely to continue liquidating Long positions or increasing Short positions, as most supportive factors for the pound have already been priced in. Technical analysis also supports further downward potential for the pound.

US and UK Economic Calendars:

• UK: Manufacturing PMI (09:30 UTC)
• UK: Services PMI (09:30 UTC)
• US: Manufacturing PMI (14:45 UTC)
• US: Services PMI (14:45 UTC)
• US: University of Michigan Consumer Sentiment Index (15:00 UTC)

Friday's economic calendar includes six key events, three of which have already triggered a significant decline in the pound. The information flow may continue to influence trader sentiment moderately for the rest of the day.

GBP/USD Trading Tips:

Sales of the pair were possible following a rebound from the 1.3044 level on the 4-hour chart, targeting 1.2931. This target was hit twice. Subsequent targets at 1.2931, 1.2892, 1.2788–1.2801, 1.2752, and 1.2611–1.2620 were also reached. Closing below the 1.2611–1.2620 zone allowed for further sales targeting 1.2570 and 1.2517, which have also been achieved.

At this time, I do not recommend buying the pair in a bearish trend. The downward movement shows no signs of ending.

Fibonacci Levels:

The Fibonacci grids are drawn from 1.3000 to 1.3432 on the hourly chart and from 1.2299 to 1.3432 on the 4-hour chart.