On Monday, on the hour chart, the pair GBP/USD made a reversal. It continued to decline and reached the level of 423.6% - 1.2432. The rebound of the quotes from this level supported GBP and the pair started growing towards 1.2600. The pair's rate fixation under the level of 1.2432 may increase the probability of a drop towards the next level of 1.2272. During the first two days of the week, there has been no information on the UK economy. On the other hand, a significant and fateful event could have happened in the UK yesterday. Very abruptly and unexpectedly, members of the Conservative Party in the British Parliament collected the necessary number of signatures to begin the process of removing Boris Johnson from power and, consequently, from the seat of party leader. A total of 54 signatures were collected, which was enough to start the relevant procedure. Last night, there was a vote among the Conservative MPs, which ended in the defeat of Boris Johnson's opponents. The conservatives failed to get the necessary number of votes for Johnson's resignation.

The reason for launching this process was Johnson's own parties during lockdown back in 2020. It was proved that Boris Johnson repeatedly held parties at his residence and invited up to 50 members of Parliament there each time. The Conservative Party decided that such behavior by their leader was hurting not only his personal ratings, but also the reputation of the entire party, so Johnson should resign. The leader of the Labour Party, Keir Starmer, also called on the Prime Minister to resign. However, Johnson declined the offer and only apologized for his behavior. Nevertheless, Johnson is to hold his position for at least 12 months unless he resigns during that time. The motion of no-confidence cannot be repeated within the next year. There will be a few other important events in the UK this week. The US inflation report scheduled for tomorrow is the most important event of the week.

On the 4-hour chart, the pair reversed to the downside after the bearish divergence at the MACD indicator and continues to decline towards the correctional level of 127.2% - 1.2250. A consolidation above the 100.0% Fibo level is likely to support the pound and increase the probability that the pair may continue climbing towards 1.2860. Now, the CCI indicator shows a bullish divergence that may trigger a reversal in favor of the pound and a return to the level of 1.2674.

Commitments of Traders report:

The sentiment of non-commercial traders has become a bit more bullish over the past week. The number of long contracts grew by 4,852, while the number of short ones decreased by 1,415. Thus, the general sentiment of big players remained bearish, and the number of longs exceeds the number of shorts by three times. Big players continue to sell the pound and their sentiment has not changed much lately. Therefore, I think that the pound might resume its decline in the next few weeks. The trading ranges on the hourly and 4-hour charts will be of great importance now because such a strong divergence of the Long and Short contract numbers can also indicate a trend reversal. So far, non-commercial traders are selling more than they are buying.

Economic calendar for the US and the UK:

There are no interesting releases in the UK and US economic calendars on Tuesday. Today the information background will have no influence on traders' sentiment.

GBP/USD forecast and recommendations for traders:

It is better to sell the pound if the pair closes below the trading channel on the hourly chart with a target of 1.2432. This level was reached today. You may sell the pound if the pair fixes below this level with a target of 1.2272. It is also better to postpone buying the pound.