On the hourly chart, GBP/USD failed to consolidate below the 1.2191 level on Thursday. A rebound from this level provided an opportunity for buying, but the resulting growth was weak. Today, the pair has returned to the 1.2191 level, and consolidation below it increases the likelihood of further declines toward the next Fibonacci level of 323.6% – 1.2036. Another rebound from 1.2191 could support a rebound toward the 1.2303 level.

The wave situation is straightforward. The last completed downward wave broke the previous low, while the most recent upward wave failed to approach the last low. This confirms the continuation of the bearish trend, with no signs of reversal. For the trend to end, GBP/USD needs to rise to at least 1.2569 and close confidently above it. Such a development is unlikely in the near future.

On Thursday, the UK released new economic data, giving traders little choice. November's GDP report showed weaker-than-expected results, and industrial production data indicated a contraction instead of the anticipated growth. Adding to the woes, Friday morning's retail sales report further dampened bullish sentiment. Retail sales in December fell by 0.3% against a forecast of 0.4%. On an annual basis, sales grew by 3.6%, below the expected 4.2%. Almost all data on the state of the UK economy this week has worked against the pound. It's surprising that bears couldn't break below 1.2191 yesterday. This is likely to happen today, or next week at the latest. The fact remains: with such economic data, the pound cannot sustain any meaningful growth. Additionally, UK inflation has declined in the last month, and the Bank of England is likely to cut interest rates at its next meeting.

On the 4-hour chart, GBP/USD rebounded from the 100% Fibonacci retracement level at 1.2299, paving the way for further declines toward the 127.2% level at 1.1993. The downward trend channel highlights bearish dominance, which is unlikely to dissipate soon. Only a breakout above the channel would signal potential strong growth for the pound.

Commitments of Traders (COT) Report

Sentiment among "Non-commercial" traders changed little in the latest reporting week. Long positions increased by 1,644, while short positions grew by 132. Bulls still hold an advantage, but it continues to diminish. The gap between long and short positions is now only 21,000: 86,000 versus 65,000.

In my view, the pound remains poised for further declines, and COT reports consistently indicate growing bearish positions almost weekly. Over the last three months, long positions have dropped from 160,000 to 86,000, while short positions have risen from 52,000 to 65,000. I believe professional traders will continue shedding long positions or adding shorts, as most bullish factors for the pound have already been priced in. Technical analysis also supports further declines for the pound.

Economic Calendar:

• UK: Retail Sales Change (07:00 UTC)
• US: Building Permits (13:30 UTC)
• US: Housing Starts (13:30 UTC)
• US: Industrial Production Change (14:15 UTC)

Friday's economic calendar includes four key events, one of which has already contributed to renewed GBP/USD weakness. The remaining news is expected to have a muted impact on market sentiment.

GBP/USD Forecast and Trading Recommendations

Selling opportunities were available after a rebound from 1.2303 on the hourly chart, with targets at 1.2191 and 1.2036. The first target has been reached, and a close below it would justify holding short positions toward the second target. Personally, I still do not plan to consider buying opportunities today.

Fibonacci Levels:

• Hourly chart: Built from 1.3000–1.3432.
• 4-hour chart: Built from 1.2299–1.3432.