According to the hourly chart, the GBP/USD pair performed a new fall in the direction of the corrective level of 423.6% (1.2432) on Monday, and on Tuesday - a reversal in favor of the UK currency and some growth in the direction of the level of 1.2600. A new rebound from this level will again work in favor of the US currency and a new fall in the direction of the 1.2432 level. Closing above 1.2600 will allow traders to count on a stronger growth of the British dollar in the direction of the corrective level of 323.6% (1.2718). The information background in the first two days of the week was practically absent for the pound. Most of the news related to the new UK sanctions against Russia, as well as new arms supplies to Ukraine. So Boris Johnson announced a new package of military assistance to Kyiv of 390 million pounds. London has also imposed restrictions on the export to Russia of certain goods that can be used in military aggression against Ukraine. The pound did not respond to these reports in any way.

This week, the Fed and the Bank of England will meet, and we will get a huge amount of food for thought. Traders are confident that both central banks will raise interest rates. The main question is what their next actions will be. If the Fed has already stated many times that it is ready to raise the rate at every meeting in 2022, then the Bank of England, on the contrary, a new rate hike may be the last. Both the US and the UK are now openly talking about a possible recession of the economy, and the indicators of the state of the economies will have to be analyzed by monetary committees. The conclusions that will be announced after the meetings will have to suggest in which direction both central banks will move. I don't see yet how the overall picture for a pound can change dramatically. The Bank of England is required to be as hawkish as possible for the 1.2600 level to be submitted to traders.

On the 4-hour chart, the pair performed a reversal in favor of the UK currency after the formation of a bullish divergence at the CCI indicator. The growth process began in the direction of the corrective level of 100.0% (1.2674), and the rebound from this level will allow traders to expect a reversal in favor of the US currency and a resumption of the fall in the direction of the Fibo level of 127.2% (1.2250).

Commitments of Traders (COT) Report:

The mood of the "Non-commercial" category of traders has changed a lot again over the past week. The number of long contracts in the hands of speculators increased by 3,625 units, and the number of short - by 14,332. Thus, the general mood of the major players has become even more "bearish". The ratio between the number of long and short contracts for speculators still corresponds to the real picture on the market - longs are 2.5 times more than shorts (110057 - 40436). The big players continue to get rid of the pound. Thus, I expect the pound to continue its decline over the coming weeks. Other factors are talking about the fall of the pound sterling, but still, the pound is a pretty strong currency, so I would not bury it hopelessly.

News calendar for the USA and the UK:

UK - PMI index for the manufacturing sector (08:30 UTC).

On Tuesday, the index of business activity in the manufacturing sector was released in the UK and it amounted to 55.8, which is slightly higher than last month. In the USA, the calendar of economic events is empty today. The influence of the information background on the mood of traders today will be absent.

GBP/USD forecast and recommendations to traders:

I recommended selling the British with a target of 1.2432 when rebounding from the level of 1.2600. Now, these deals can be kept open. Purchases of the British can be started at a new rebound from the level of 1.2432 or when fixed above the level of 1.2600. In the first case, the target is 1.2600, in the second – 1.2718.