The GBP/USD pair resumed its upward movement on Monday. Last week, the price rebounded from imbalance 17, thereby forming a sell signal. However, a buy signal had previously also formed in the shape of a "Three Drives pattern," while the overall trend remains bullish. In addition, a bullish signal may form today for the euro, which could also support bulls in the pound. The chart picture is currently highly contradictory, as are many other events and factors.
On Friday, the Nonfarm Payrolls and unemployment reports should have triggered new bearish attacks—but they did not. On Monday, Donald Trump stated that he would "devastate" Iran on Tuesday if the Strait of Hormuz is not reopened. Yet the dollar did not strengthen again. No bullish signals were formed, but the pound is rising. The bearish imbalance 17 can be considered completed, which means there are no major barriers for bulls above.
Recently, Washington has shown a desire to end the war—but on its own terms. Iran, meanwhile, is willing to end it on its own terms. Most likely, because Iran is not ready to accept Washington's ultimatums, we are seeing Trump's harsh rhetoric. Traders are reacting alternately to improvements and deteriorations in the geopolitical backdrop. However, stronger moves in either the pound or the dollar require real signs of de-escalation or escalation—not just words.
The probability of a decline in both pairs remains quite high, and all discussions about a possible bullish advance are currently just assumptions without confirmation or solid evidence. At the same time, I cannot ignore the important and relatively rare "Three Drives pattern," marked on the chart with a triangle. It represents three consecutive swings, each slightly lower or higher than the previous one, signaling the end of a bearish impulse (in our case). Thus, technical analysis suggests a reasonable chance of a bullish move, but bulls critically need support from geopolitics.
As long as the bullish trend remains intact (above the 1.3012 level), I would focus more on bullish signals. However, at the moment there are no clear bullish patterns or signals, and geopolitics could push the pound down at any time.
The news background on Monday was relatively weak. Donald Trump once again threatened Iran with the total destruction of its infrastructure if the Strait of Hormuz is not reopened by April 7, while the U.S. released its ISM Services PMI. Neither of these events drove the pound higher during the day.
In the U.S., the overall backdrop suggests that, in the long term, little can be expected except dollar weakness. Even the conflict between Iran and the U.S. does not significantly change this. The long-term outlook for the dollar remains challenging, with only short-term positive factors. The labor market continues to weaken, the economy is moving closer to recession, and—unlike the ECB and the Bank of England—the Federal Reserve is not planning to tighten monetary policy in 2026. Last weekend, the fourth large-scale protest against Donald Trump took place across the United States. From an economic perspective, there are no strong grounds for dollar growth.
A sustained bearish trend (for GBP/USD) would require a strong and stable positive backdrop for the dollar, which is difficult to expect under Donald Trump. For over a month now, geopolitics has been supporting the dollar, but this support will eventually fade. It is difficult to say when this will happen, so it cannot be ruled out that the dollar may continue to strengthen for another week, month, or even several months.
Economic calendar for the U.S. and the U.K.:
- U.S. – Change in Durable Goods Orders (12:30 UTC).
On April 7, the economic calendar contains one important event. The impact of the news flow on market sentiment on Tuesday may be present, but mainly in the second half of the day.
GBP/USD forecast and trading advice:
For the pound, the long-term outlook remains bullish, but there are currently no active bullish patterns. The sharp decline in recent weeks was largely due to an unfortunate combination of circumstances. If Donald Trump had not initiated the conflict in the Middle East, we likely would not have seen such strong dollar growth. I believe this decline could end just as unexpectedly as it began. However, at present, the bearish phase cannot yet be considered complete.
In the near term, traders can rely only on the signal within the bearish imbalance 17. The signal has formed, giving traders an opportunity to sell the pound with a target around the 1.3000 level. However, this signal may be contradicted by geopolitics, a potential bullish signal in the euro, and is already challenged by the bullish "Three Drives pattern."
