10.03.202619:32 Forex Analysis & Reviews: GBP/USD. Smart Money. Has the Pound Started the Path to Recovery?

The GBP/USD pair reversed after five attempts to secure a position below the last two bearish swings. As a result, instead of breaking those lows, the market performed a liquidity sweep of them. Let me remind you that a liquidity sweep is a warning to traders about a possible price reversal in the opposite direction. It is not a pattern that can be used to open trades, but after a trend change we can expect the formation of patterns that can later be used to open positions. The pound has been recovering for the third consecutive day. If it were not for Trump's suggestion of a possible ground operation over the weekend, the pound would likely be trading even higher. Instead, Monday began with another drop, which prevented traders from developing the corrective pullback.

Tomorrow the United States will release the February inflation report. It is difficult for me to say whether the market will react to it, since recent important reports on the labor market, economic growth, and unemployment were ignored. In my opinion, the market is currently trading based on a simple logic chain: "negative news from the Middle East – the dollar rises; no negative news – the dollar falls." Therefore, a decline in the dollar is likely this week.

At the moment there are no bullish patterns, and the price is unlikely to return to Imbalance 16 in the near future and give traders the signal they need on a second attempt. In my view, if there is no new escalation in the Middle East in the coming days, demand for the dollar will continue to decline. Over the past six days bears have been attacking much more weakly than before, even though the war in Iran continues and energy prices remain high. I have also marked one weak bearish imbalance on the chart that could theoretically trigger a market reaction. However, I personally do not believe this is very likely. The imbalance is weak, and I currently see no reasons for a new rise in the dollar.

The bullish trend in the pound remains intact. Therefore, as long as it persists (above the 1.3012 level), I would pay more attention to bullish signals. The pound's decline may be quite strong, but now bears need new reasons for further attacks. The mere fact of the war will no longer be enough for the dollar. Last week the market ignored U.S. statistics and is unwilling to sell the dollar in favor of other currencies. However, this will not last forever. Today bulls are once again trying to move into offense.

The information background on Tuesday was weak, and bulls are taking advantage of the absence of new negative news from the Middle East. In my opinion, this week we will see the pound rise at least due to a liquidity sweep of the last two swings. How strong this move will be will determine the pound's further prospects.

In the United States, the overall information background remains such that, in the long term, nothing but a decline of the dollar can be expected. And the war between Iran and the United States has changed little so far. The situation for the U.S. dollar remains rather difficult in the long term and positive only in the short term. But that is the key point—it is positive only in the short term. U.S. labor market statistics continue to disappoint more often than they please. Three of the last four FOMC meetings ended with a dovish decision. Trump's military aggression, threats toward Denmark, Mexico, Cuba, Colombia, EU countries, Canada, and South Korea, the criminal case against Jerome Powell, government shutdowns, the scandal involving the U.S. elite in the Epstein case, a possible impeachment of Trump by the end of the year, and very likely election losses for Republicans all complement the current picture of political and structural crisis in America. In my opinion, bulls have everything they need to resume their offensive during 2026.

For a bearish trend to form, a strong and stable positive information background for the dollar is required—something that is difficult to expect under Donald Trump. Therefore, I still do not believe in a bearish trend for the pound. Too many risk factors continue to weigh heavily on the dollar. One could consider opening sell positions based on bearish patterns, but personally I doubt the correctness of such a decision. I believe the recent drop in the pair was to some extent a random combination of circumstances.

News calendar for the United States and the United Kingdom:

• United States – Consumer Price Index (12:30 UTC)

On March 11, the economic calendar contains one fairly important entry. The information background may influence market sentiment on Wednesday.

GBP/USD forecast and trader advice

For the pound, the long-term picture remains bullish. There are currently no relevant bullish patterns—only a bearish imbalance, to which the price must first return and produce a reaction before traders can consider the potential opportunity to open sell positions.

It should also be noted that the pound's decline in recent weeks turned out to be strong enough to temporarily transform the bullish picture into a bearish one due to an unfortunate combination of circumstances. If Donald Trump had not repeatedly promised to attack Iran every other day, had not sent warships to the Persian Gulf, and had not eventually started the war, we would hardly have seen such a strong rise in the dollar. I believe this decline may end just as unexpectedly as it began. The starting point for a bullish offensive this week could be a liquidity sweep of the lows at 1.3341 and 1.3310.