The GBP/USD currency pair showed absolutely no interesting movements on Monday, which is easily explained by the complete lack of significant events on the calendar. The year 2026 was supposed to be another "year of failure" for the U.S. dollar. But unexpectedly, Donald Trump intervened. By starting a war in the Middle East, the U.S. president created problems for everyone he could think of. The entire world is facing an energy crisis and a sharp spike in oil and gas prices. Central banks are forced to raise key rates in response to skyrocketing inflation. The U.S. dollar has appreciated, although Trump aimed for the opposite effect. Consumers worldwide are facing a sharp increase in prices for basic goods.
Interestingly, Trump's antics in Iran have achieved nothing. Tehran still has no intention of abandoning its nuclear developments or handing over any nuclear fuel stocks. Trump's political ratings have plummeted to minimum levels during both of his terms in the White House, as few people in the U.S. consider a war with Iran necessary or beneficial. Thus, what Trump has achieved through aggression in the Middle East is merely a few additional tens of billions of dollars in the budget, which America received by increasing energy sales.
Overall, the market has formed a long-term flat, which is most clearly visible on the weekly timeframe. Over the past year, the GBP/USD pair has dropped into the 1.3040–1.3170 range five times but has never managed to continue falling, thus initiating a dollar trend. During the same period, the pair has risen to the 1.3660–1.3790 range four times. Therefore, these two ranges can be considered the lower and upper boundaries of the sideways channel. Since the price recently visited the lower range, even without compelling reasons, the pound sterling could rise back into the 1.3660–1.3790 range in the coming weeks.
It is worth noting that despite a year of stagnation, the GBP/USD pair has been in an upward trend for five years, whereas over the previous 16- 17 years it was in a downward trend. Since no trend lasts forever, it is possible that a new global upward trend began in 2022. Given that we still do not see substantial reasons to strengthen the U.S. dollar, we believe the British pound will continue to appreciate in the long term, simply because Trump remains president of the U.S. and will continue to unsuccessfully attempt to reshape the world to his liking.
Do not be surprised if you hear new claims from the leader of the White House about Greenland or friendly advice for Scotland to become the 51st state of America. This tactic is called "take what is poorly placed." Fortunately, in this world, "poorly placed" only refers to what is needed by no one. However, protectionist policies will continue to force the entire world to abandon the dollar. For several years now, central banks have been reducing dollar reserves, which is the best indicator of the future of the American currency.
The average volatility of the GBP/USD pair over the past five trading days as of July 7 is 69 pips, which is considered "average." On Tuesday, July 7, we expect the pair to move within the range of 1.3296 and 1.3434. The upper channel of the linear regression has turned downward, indicating a continuation of the downward trend. The CCI indicator has entered the oversold area and formed two bullish divergences, warning of a possible end to the downward trend.
Nearest Support Levels:
- S1 – 1.3306
- S2 – 1.3245
- S3 – 1.3184
Nearest Resistance Levels:
- R1 – 1.3367
- R2 – 1.3428
- R3 – 1.3489
Trading Recommendations:
The GBP/USD pair maintains a downward trend, presumed to be a correction within a global upward trend, as seen on the daily or weekly timeframe. The global fundamental background for the dollar remains negative, but in 2026, geopolitical factors and the Federal Reserve's hawkish stance have provided substantial support for the American currency. If the price is below the moving average, short positions can be considered with targets at 1.3184. Long positions are relevant above the moving average with targets at 1.3428 and 1.3489. Bears are currently strong for no visible reason.
Explanations to Illustrations:
- Linear regression channels help determine the current trend. If both are pointing in the same direction, it indicates that the trend is currently strong.
- The moving average line (settings 20.0, smoothed) determines the short-term trend and the direction in which trading should be conducted.
- Murray levels are target levels for moves and corrections.
- Volatility levels (red lines) indicate the probable price channel in which the pair will operate over the next day based on current volatility indicators.
- The CCI indicator—its entry into oversold territory (below -250) or overbought territory (above +250) indicates that a trend reversal is approaching in the opposite direction.
