This week, the GBP/USD pair has risen by nearly 300 points. What prompted traders who had been buying the dollar for two months to suddenly abandon their core strategy? The reasons were compelling—albeit somewhat contradictory. Let's begin with the technical picture. As noted in recent analyses, a rare and significant Three Drives pattern formed, triggering the current upward move. This provided traders with a clear bullish signal, while the broader trend remained firmly intact.
Second, for the first time in two months, the Middle East conflict showed signs of potential resolution. At present, the ceasefire remains fragile, and participants in the conflict have not yet fully clarified who is included in it and who remains a target. Unfortunately, the Strait of Hormuz remains blocked, as Iran accuses Israel and the United States of violating ceasefire agreements. However, the market believes that peace is possible. Another round of negotiations between the U.S. and Iran is expected in the near future.
The probability of a decline in both pairs remains fairly high, as the ceasefire is still unstable. At the same time, the Three Drives pattern—marked by a triangle on the chart—allowed bulls to go on the offensive, which is already a positive development. This pattern consists of three consecutive swings, each slightly lower or higher than the previous one, signaling the end of a bearish impulse (in this case). Therefore, technical analysis suggests good chances for further gains in the pound, but bulls still need support from geopolitics. As long as the bullish trend remains intact (above 1.3012), more attention should be paid to bullish signals. This week, a bullish imbalance is likely to form, which may offer new buying opportunities in the future.
Thursday's economic backdrop helped bullish traders continue their geopolitical-driven advance. U.S. GDP for the fourth quarter declined further, with the economy ultimately growing by only 0.5%. Tomorrow, another key report—U.S. inflation for March—will be released, likely reflecting the first negative economic effects of Trump's military actions in the Middle East. Inflation is expected to rise from 2.4% year-over-year to around 3.2–3.3%. However, what matters more than the figure itself is the trend in the coming months and the Federal Open Market Committee's response. Recent statements from Jerome Powell and his colleagues suggest that tightening monetary policy is not seriously being considered at this stage.
In the United States, the overall news backdrop suggests that, in the long term, there is little reason to expect anything other than dollar weakness. The conflict between Iran and the U.S. does not significantly change this outlook. The situation for the dollar remains challenging in the long term and favorable only in the short term. The labor market continues to weaken, the economy is moving closer to recession, and the Federal Reserve—unlike the ECB and the Bank of England—is not planning to tighten monetary policy in 2026. Additionally, a fourth major wave of protests against Donald Trump has taken place across the country. From an economic perspective, there are no strong reasons for dollar growth.
A sustained bearish trend (for GBP/USD) would require a strong and consistent positive news backdrop for the dollar—something that is difficult to expect under Donald Trump. Geopolitics has supported the dollar for over a month, but this support will eventually fade. It is difficult to predict when, so the dollar could continue to rise for another week, a month, or even several months.
News Calendar for the U.S. and the U.K.:
- U.S. – Consumer Price Index (12:30 UTC)
- U.S. – University of Michigan Consumer Sentiment Index (14:00 UTC)
On April 10, the economic calendar contains two key events, with inflation standing out. The news backdrop may influence market sentiment on Friday, although traders continue to focus mainly on geopolitical developments.
GBP/USD Forecast and Trading Tips:
For the pound, the long-term outlook remains bullish, although there are currently no active bullish patterns. Only the Three Drives pattern warned traders of a potential upward move. The sharp decline in recent weeks was largely due to an unfortunate combination of factors. If Donald Trump had not initiated the Middle East conflict, the dollar likely would not have strengthened so significantly. At present, the bearish phase cannot yet be considered fully complete. The price may still sweep liquidity from the last two bullish swings, and the ceasefire could completely collapse—reviving bearish pressure.
In the near term, traders can only rely on the formation of new bullish patterns. Most likely, an imbalance will form this week, offering future buying opportunities. If a proper ceasefire is reached (not the fragile one currently in place), the pound may continue rising toward this year's highs.
