Hello, dear traders! On the hourly chart, on Tuesday the GBP/USD pair made a new reversal in favor of the British currency after the rebound from the correctional level of 61.8% at 1.3576. Therefore, it remains within the upward trend corridor, indicating further traders' bullish sentiment. The quotes were falling twice below the corridor during the last two days, however bull traders took the initiative twice. Thus, I think that the bullish impulse is exhausted, however the growth may continue for a couple of days towards the Fibo level of 76.4% at 1.3675. Today, traders will have the chance to change their sentiment to bearish. There are two reasons for it. Firstly, the pound has been rallying for quite a long time. Besides, there are no significant events in the UK, which may stimulate the pound to rise. The second reason is the US inflation report.

Inflation has also been rising for quite a long time and it might remain stable at the end of December. This fact could be slightly pessimistic for dollar sellers. In any case, Jerome Powell said that his office would take measures to get inflation back to the 2% target in the medium term. Earlier, the inflation report implied an additional chance of a more rapid move to tighten monetary policy. Notably, the EUR/USD pair has not been growing in recent weeks. Moreover, only the British currency is rising. The two European currencies may soon start to work out this mismatch. The British reports to be released on Friday, will probably have a negative impact on the pound exchange rate. Besides, the British economy may be slowing down during the Omicron period as the epidemic situation is not improving. All these factors indicate that the British currency will start declining against the dollar this week. However, I recommend focusing on the more stable trend line on the 4-hour chart as a benchmark for the start of the pair's decline.

On the 4-hour chart, the pair performed two small declines after two bearish divergences formed in the MACD indicator. However, the new uptrend line continues to give strong support to the British currency. Unlike the corridor on the hourly chart, which is already broken. Thus, the closing under the trend line will favour the US currency and the start of decline towards the correctional level of 50.0% at 1.3457. If the quotes rebound from the 38.2% level at 1.3642, the pair may also start falling.

US and UK economic news calendar:

US - Consumer Price Index (13-30 UTC).

On Wednesday, the UK economic calendar is completely empty. On the contrary, the USA will release a significant inflation report, which will have the biggest impact on the traders' sentiment today. However, the trend line on the 4-hour chart will be of high priority.

GBP/USD outlook and recommendations for traders:

I recommend new sales of the British pound if there is a close under the rising trend line on the 4-hour chart with a target of 1.3497. I recommended buying the pound with a target of 1.3642 as there was a pullback from the 50.0% level at 1.3497. A consolidation above the level of 1.3642 will allow traders to buy with the targets of 1.3675 and 1.3834.