On the hourly chart, GBP/USD rallied to the 50.0% Fibonacci retracement level at 1.3348 on Friday and consolidated above it on Monday. As a result, the pound may continue to advance towards the next Fibonacci retracement level of 38.2% at 1.3397. A close below 1.3348 would favour the US dollar and open the way for a decline towards the 61.8% Fibonacci retracement level at 1.3298.

The wave structure has turned bearish. The most recent completed upward wave exceeded the previous peak, while the latest downward wave broke below the previous low. As a result, sellers have regained control of the market. In my view, the bearish impulse that began in 2026 has now run its course, and only geopolitical developments could prevent buyers from resuming their advance. At present, geopolitical factors are once again weighing on risk-sensitive assets.

Friday's news background supported the pound and encouraged bullish trading activity. Buyers did step in, although only modestly. However, last week's developments have already been overtaken by events, as the new week began with a ceasefire in the Middle East. How long this ceasefire will hold remains uncertain. In reality, there is no formal ceasefire at present. Donald Trump has merely suspended US strikes on Iran and is now likely waiting for a response from Tehran. Iran has responded by halting its attacks on US military bases. However, Trump is seeking more than that. He expects negotiations to resume, as though the past thirteen days of hostilities had fundamentally changed Tehran's position. For this reason, I do not believe that the two sides have genuinely returned to diplomacy, and any US dollar weakness driven by this factor may prove short-lived.

This week, market participants will also focus on the upcoming policy meetings of the Federal Reserve and the Bank of England. Although both central banks are widely expected to leave monetary policy unchanged, unexpected developments remain possible. At this stage, even the policymakers themselves may not know what those surprises could be. One thing is clear: the situation remains highly uncertain and difficult to predict.

On the 4-hour chart, GBP/USD rebounded from the 23.6% Fibonacci retracement level at 1.3538, reversed in favour of the US dollar, and continues to decline towards the 76.4% Fibonacci retracement level at 1.3277. A close above 1.3348 would allow traders to anticipate a moderate recovery. No developing divergences are currently visible on any of the technical indicators.

Commitments of Traders (COT) Report

Sentiment among Non-commercial traders became less bearish during the latest reporting week, although it remains negative overall. The number of Long positions increased by 13,197, while Short positions declined by 2,495. The positioning gap now stands at approximately 64,000 Long positions versus 119,000 Short positions. The bearish advantage is narrowing, although sellers still retain overall control. Previously, the dominance of bearish positioning was unquestionable, but changes in the fundamental backdrop have made the outlook less clear.

I still do not believe in a sustained bearish trend for the pound. In the near term, however, market direction will depend less on economic data, Trump's trade policy, or central bank decisions than on the duration, scale, and consequences of the conflict in the Middle East. In recent months, markets had shifted towards expectations of peace, but negotiations between Iran and the United States collapsed before making meaningful progress. There is also no guarantee that talks will resume in the near future.

Economic Calendar

United States

• Durable Goods Orders (Month-on-Month) – 12:30 UTC

The economic calendar for July 26 contains only one notable release. It may provide support for the US dollar, although it may also have little impact on overall market sentiment. Consequently, the influence of macroeconomic data is expected to remain limited on Monday and is likely to be felt only during the second half of the trading day.

GBP/USD Forecast and Trading Tips

Sell: Short positions were justified following a rejection from 1.3397 on the hourly chart, targeting 1.3348 and 1.3298. Both targets have been reached. New short positions may be considered after a confirmed close below 1.3348, with downward targets at 1.3298 and 1.3238.

Buy: Long positions were justified following a rebound from 1.3298, targeting 1.3348 and 1.3397. The first target has been achieved, and existing long positions may be held.

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