On the hourly chart, the GBP/USD pair traded below the 61.8% Fibonacci retracement level at 1.3298 on Tuesday, failing to either extend its decline or initiate a recovery. Therefore, today, a rebound from the 1.3298 level would favour the US dollar and the resumption of the decline towards the 76.4% Fibonacci retracement level at 1.3238, while consolidation above 1.3298 would allow for a modest recovery in the pound towards the 50.0% Fibonacci retracement level at 1.3348.

The wave structure remains bearish. The last completed upward wave broke above the previous peak, while the latest downward wave, which is still developing, has broken below the previous low. As a result, the bears have regained control of the market. In my view, the bearish impulse that dominated in 2026 has already run its course, and the only factor preventing the bulls from resuming their advance is geopolitics. At present, geopolitical tensions are once again weighing on risk assets.

There was no significant economic news on Tuesday, while traders largely ignored geopolitical developments. A new escalation between Iran and the United States could occur at any moment, but today's primary focus is the FOMC meeting. Personally, I see no reason for the Federal Reserve to tighten monetary policy in July, as the June Nonfarm Payrolls report produced a very weak result, while inflation slowed to 3.5%. In other words, two key conditions for keeping interest rates unchanged have already been met. It is worth remembering that the Federal Reserve has two primary mandates: price stability and maximum employment. If employment is weakening and inflation is declining, what justification is there for raising interest rates? Certainly, there are risks—namely, the risk of another surge in oil prices and a renewed acceleration in inflation. However, risks remain only risks, and no one knows what lies ahead. No one knows how the conflict in the Middle East will evolve by September, where inflation will stand, or how the labour market will perform. Therefore, I believe the Federal Reserve will refrain from making any radical policy decisions and may even adopt a wait-and-see approach in September.

On the 4-hour chart, the GBP/USD pair rebounded from the 61.8% Fibonacci retracement level at 1.3348 and declined towards the 76.4% Fibonacci retracement level at 1.3277. Consolidation below 1.3277 would allow traders to expect a further decline towards the next retracement level at 100.0% – 1.3159. At the same time, the CCI indicator has formed a bullish divergence, which could coincide with a rebound from 1.3277 and support a recovery in the pound.

Commitments of Traders (COT) Report:

Sentiment among the Non-commercial category became less bearish over the latest reporting week, although it remains bearish overall. The number of Long positions held by speculative traders increased by 13,197, while the number of Short positions declined by 2,495. The current balance stands at approximately 64,000 Long positions versus 119,000 Short positions. The gap is narrowing, and the bears' advantage is gradually diminishing. Previously, bearish dominance was unquestioned, but the changing fundamental backdrop has made that dominance less convincing.

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 months, the market had shifted towards expectations of peace, but negotiations between Iran and the United States collapsed before they had meaningfully begun. Moreover, there is no guarantee that talks will resume in the near future.

News Calendar for the United States and the United Kingdom:

United States

• FOMC interest rate decision (18:00 UTC)
• FOMC press conference (18:30 UTC)

The economic calendar for 29 July contains two important events. As a result, the economic backdrop may have a significant impact on market sentiment during the second half of Wednesday.

GBP/USD Forecast and Trading Tips:

Short positions were possible after a close below 1.3298 on the hourly chart, with downward targets at 1.3238 and 1.3177. Long positions may be considered today if the pair consolidates above 1.3298, with upward targets at 1.3348 and 1.3397.

Fibonacci retracement levels are drawn from 1.3140–1.3557 on the hourly chart and from 1.3158–1.3655 on the 4-hour chart.