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The GBP/USD pair reacted yesterday to the bearish imbalance (17), which allowed traders to reopen short positions. However, while the bullish trend in EUR/USD is on the verge of being canceled, in GBP/USD it remains intact without reservations. Thus, a sell signal has formed on a bullish trend for the pound. The news background yesterday and today was not only important but also extensive. On Wednesday evening, the results of the Fed meeting became known, which I would describe as "hawkish." Today, the Bank of England and the ECB also concluded their meetings, and I would also describe their outcomes as "hawkish." Thus, the bearish move was supported by the news yesterday, but today it is the bulls who are benefiting. Demand for the British pound began to rise during the US session, which may lead to the invalidation of imbalance (17). If this happens, it will be the first sign of the end of the bearish move. In that case, I would expect the bullish trend to resume and the formation of bullish patterns.
There has been no open escalation of the conflict in the Middle East this week, but the situation has not improved overall. Iran continues to block the Strait of Hormuz, Gulf states continue to exchange missile and drone strikes, EU countries are urgently trying to resolve the looming energy crisis on their own, and central banks are preparing for rising inflation. Thus, neither bulls nor bears have received clear support. The geopolitical factor continues to favor the bears, while bulls rely on the fact that this factor cannot support bears indefinitely.
At present, there are no bullish patterns, but yesterday a new sell signal was formed at imbalance (17). The euro also has a similar imbalance, meaning that for the second time in a row, both the euro and the pound have produced identical trading signals. The probability of a new decline in both pairs remains fairly high, while any discussion of a potential bullish move is still speculative and lacks confirmation. At the same time, in my view, the current rise of the dollar is fragile.
The bullish trend for the pound remains intact. As long as it holds (above 1.3012), more attention should be given to bullish signals. However, there are currently no bullish patterns or signals, while geopolitical risks continue to create ongoing downward pressure on the euro and the pound.
The news background on Wednesday supported the bulls. The Bank of England made the expected decision to keep monetary policy unchanged, and the MPC vote was 100% hawkish. Not a single member voted in favor of easing. This information provided strong support for the bulls.
In the United States, the overall news environment suggests that, in the long term, the dollar is more likely to weaken than strengthen. The conflict between Iran and the US has not significantly changed this outlook. The situation for the US dollar remains quite difficult in the long term but highly favorable in the short term. US labor market data continues to disappoint more often than it reassures. Trump's military actions, threats toward Denmark, Mexico, Cuba, Colombia, EU countries, Canada, and South Korea, the criminal case against Jerome Powell, government shutdowns, the Epstein-related scandal involving US elites, a possible impeachment of Trump by the end of the year, and a likely Republican defeat in elections all contribute to a broader political and structural crisis in the US. In my opinion, bulls have everything needed to resume their advance in 2026, but at present traders are fully focused on geopolitics and the energy crisis.
A sustained bearish trend would require a strong and stable positive news background for the US dollar, which is difficult to expect under Donald Trump and unlikely to be provided by geopolitics alone. However, uncertainty remains high. If a major global conflict were to expand beyond the Middle East, the dollar could strengthen significantly and for an extended period. Still, I remain somewhat optimistic that this will not happen. In that case, the dollar's upward potential is limited by the negative developments in the Middle East.
News calendar for the US and the UK:
On March 20, the economic calendar contains no significant events. The news background is unlikely to influence market sentiment on Friday.
GBP/USD forecast and trading advice:
For the pound, the long-term outlook remains bullish. At present, there are no bullish patterns, only a sell signal from imbalance (17), which may temporarily support the bears. I would again emphasize the fragility of the dollar's current strength. The recent decline in the pair has been driven by a series of unfavorable events. Without escalating tensions involving Iran, military deployments in the Persian Gulf, and the outbreak of conflict, such a strong rise in the dollar would likely not have occurred. I believe this decline could end as unexpectedly as it began. However, for now, the bearish move continues. If imbalance (17) is not invalidated, the pair may resume its decline toward the 1.3000–1.3100 level.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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