On the hourly chart, GBP/USD completed a second, more complex rebound from the 1.3158–1.3177 support level, reversed in favor of the pound, and began a gradual move higher toward the 1.3268–1.3277 resistance level. Therefore, the pair may continue to rise today based on technical factors. A consolidation below the 1.3158–1.3177 support level would favor the U.S. dollar and signal a resumption of the decline toward the 127.2% Fibonacci retracement level at 1.3025.
The wave pattern turned bearish following the FOMC meeting. The most recently completed downward wave broke below the previous low, while the new upward wave failed to exceed the previous high. It remains uncertain how much momentum the bears have left this time, as the dollar's fundamental support does not appear particularly convincing. From a purely wave-based perspective, the bears continue to dominate the market. However, with the conflict in the Middle East now over, it is difficult to expect sustained long-term gains for the U.S. dollar.
Friday's economic calendar was effectively empty. The U.S. Consumer Sentiment Index had virtually no impact on market sentiment. Over the weekend, reports emerged that Iran and the United States had exchanged strikes for three consecutive days. However, fighting ceased on Monday morning, with representatives of both countries announcing a new ceasefire. Overall, I do not believe the market has paid much attention to geopolitical developments in recent weeks. The bears remained firmly in control even as Iran and the United States signed a memorandum of understanding, reopened the Strait of Hormuz, and resumed nuclear negotiations. Consequently, the latest escalation in the Middle East did little to discourage the bears, and the suspension of hostilities between Tehran and Washington is unlikely to alter their stance. In my view, the geopolitical backdrop currently favors the bulls, but they have been unable to regain momentum after the Federal Reserve adopted a more hawkish tone a week and a half ago. Even so, that factor has already been more than fully priced in. The question now is what new catalyst the bears will find to extend the decline—or whether they need one at all. As long as GBP/USD remains above the 1.3158–1.3177 support level, the pound is well positioned to begin a new upward trend.
On the 4-hour chart, GBP/USD rebounded from the 100.0% Fibonacci retracement level at 1.3159, reversed in favor of the pound, and started advancing toward the 76.4% Fibonacci retracement level at 1.3277. A bullish divergence on the CCI indicator also supported the recovery. A consolidation below 1.3159 would increase the likelihood of renewed downside toward the 1.3025–1.3044 support level.
Commitments of Traders (COT) Report
Sentiment among the Non-commercial group became more bearish during the latest reporting week. The number of Long positions held by speculative traders declined by 1,271, while Short positions increased by 32,863. The overall positioning now stands at approximately 41,000 Long positions versus 147,000 Short positions. Although bears have dominated the market for several months, this dominance is becoming increasingly difficult to justify given the significant changes in the fundamental backdrop. Bears currently outnumber bulls by more than three to one.
I still do not believe in a sustained bearish trend for the pound. However, in the near term, market direction will depend less on economic data, Trump's trade policy, or central bank monetary policy than on the duration, scale, and consequences of the conflict in the Middle East. In recent weeks, the market has shifted toward expecting a peaceful resolution, but negotiations between Iran and the United States could prove lengthy and difficult. There is no guarantee that they will ultimately result in a nuclear agreement.
Economic Calendar for the U.S. and the U.K.
The economic calendar for June 29 contains no scheduled events. As a result, the macroeconomic backdrop is not expected to influence market sentiment on Monday.
GBP/USD Forecast and Trading Tips
Sell: Short positions were appropriate following a rebound from the 1.3268–1.3277 resistance level on the hourly chart, targeting the 1.3158–1.3177 support level. That target has been reached. New short positions may be considered after a confirmed close below the 1.3158–1.3177 support level, with a target at 1.3025.
Buy: Long positions became possible following a rebound from the 1.3158–1.3177 support level, targeting the 1.3268–1.3277 resistance level. These positions may still be held.
Fibonacci grids are drawn from 1.3158 to 1.3655 on both the hourly and the 4-hour charts.
