GBP/USD declined into Bullish Imbalance 18, reacted to this pattern, formed a Bullish Engulfing candlestick pattern, and then returned to Bearish Imbalance 19. Since then, the pair has been trading within this pattern for two weeks without showing any intention of leaving it. No reaction has followed from Imbalance 19, which means the technical picture continues to support a bullish scenario. However, the pattern has not yet been invalidated.
Today, Donald Trump once again stated that a deal with Iran could be signed in the very near future, possibly as soon as next week, apparently overlooking the fact that two weeks ago the agreement was also expected to be signed "within a few days." The US president also appears to have disregarded statements coming from Tehran. Both yesterday and today, Iranian officials stated that negotiations with the United States had been suspended due to repeated violations of the ceasefire and renewed Israeli military actions against Lebanon.
Whether Iran will agree to resume negotiations remains unclear. Although Trump succeeded in persuading Israel not to launch a new offensive against Lebanon, it should be understood that this is far from the only obstacle preventing the signing of a memorandum with Iran. The demands of both sides—based on the limited information available through media reports—remain fundamentally different. Therefore, I have little confidence that a deal will be signed or that the Strait of Hormuz will be reopened either next week or even within the next month.
Overall, the situation surrounding the Middle East conflict is gradually improving, but traders remain concerned that the next shift could once again be toward escalation. In fact, this pattern has repeated itself for the past two weeks. Last week, the United States launched two missile strikes against Iranian facilities, while Iran responded with strikes on US bases in Kuwait. A new week has begun, and the situation has repeated itself. One can only hope that negotiations will not collapse entirely and that the agreement—which reportedly has already been drafted and approved—will not be abandoned. Recently, however, news flow has been predominantly pessimistic, improving the outlook for the bears.
In my view, the broader trend remains bullish despite the pair's significant declines earlier this year. The ceasefire in the Middle East remains fragile but is still in place and may be extended for another 60 days. At the same time, the Strait of Hormuz remains under a dual blockade, the nuclear issue remains unresolved, and any assessment of progress in negotiations relies largely on statements from Donald Trump, who continues to repeat the same message each week. Iran maintains a very different position.
The situation continues to fluctuate between improvement and deterioration. For now, the market still retains some confidence that an agreement will eventually be reached, but that confidence is not unlimited. Recent developments in the Strait of Hormuz could, at the very least, complicate future negotiations.
From a technical perspective, the picture remains straightforward. Bullish Imbalance 18 generated a valid price reaction, while Bearish Imbalance 19 is likely to be invalidated. Therefore, the technical structure continues to support further gains in the pound. The key task now is to monitor geopolitical developments closely so that long positions can be exited promptly if negotiations once again reach a deadlock and the framework agreement remains approved but unsigned.
The economic calendar on Tuesday was limited to the US JOLTS report, which the market largely ignored. We continue to see limited trader interest in economic data releases.
In the United States, the broader fundamental backdrop remains one that offers little support for sustained dollar appreciation in the long term. Even the conflict involving Iran has changed very little in that regard. Geopolitical developments temporarily reminded investors of the dollar's safe-haven status, but the longer-term outlook for the US currency remains challenging.
The US labor market continues to weaken, the economy is moving closer to recession, inflation is rising, and the Federal Reserve has little room to tighten monetary policy in 2026. In addition, several large-scale protests against Donald Trump have taken place across the country, while the eventual departure of Jerome Powell could further complicate the outlook for the dollar if the Federal Open Market Committee adopts a more dovish stance under a future chair such as Kevin Warsh.
From a purely economic perspective, I see little justification for sustained dollar strength. Geopolitical developments remain the primary factor capable of supporting the US currency.
Economic Calendar for the United States and the United Kingdom
- United Kingdom – Services PMI (08:30 UTC).
- United States – ADP Employment Change (12:15 UTC).
- United States – ISM Services PMI (14:00 UTC).
The economic calendar for June 3 contains three scheduled releases, two of which can be considered significant. Economic data may influence market sentiment during the second half of Wednesday's trading session.
GBP/USD Forecast and Trading Tips
The long-term outlook for the pound remains bullish. The Three Drives pattern signaled the beginning of the upward move, and since then three bullish patterns and three bullish trading signals have formed, all of which offered trading opportunities.
At present, bulls continue to hold the initiative and have generated a new bullish signal within Bullish Imbalance 18. If geopolitical developments become more favorable, the upward trend is likely to continue. My long-term target for the pound remains the 2026 high at 1.3867, while the nearest target stands at 1.3656.
At this stage, there are no grounds for considering a bearish trend. The only bearish imbalance is on the verge of invalidation, and no new bearish patterns have emerged.
