01.04.202620:43 Forex Analysis & Reviews: GBP/USD: Smart Money — Rare Pattern and Geopolitics in Focus

The GBP/USD pair reversed in favor of the pound and began a fairly strong upward move. At the moment, the "bearish" imbalance 17 has been reached, from which traders may expect a reaction and a sell signal. However, as I already noted in the EUR/USD analysis, geopolitics over the past two days has sharply turned against the U.S. dollar. Therefore, if no news emerges today or tomorrow indicating renewed escalation in the Middle East, bulls may continue their advance. Moreover, the invalidation of imbalance 17 would itself be a kind of bullish signal.

For fairness, it should be noted that hopes for peace in Iran remain quite fragile. So far, we only have stated intentions from the U.S. and Iranian presidents to end the war. However, the parties still need to agree on the terms of a ceasefire. Let me remind you that a month ago, negotiations between Tehran and Washington were already taking place. At that time, Donald Trump demanded that Iran abandon all nuclear development and weapons. Iran rejected these conditions, and the world witnessed a month-long war. What is the likelihood that Tehran will now make concessions to the United States?

Washington is indeed showing a desire to end the war, but on its own terms. Iran, in turn, is ready to end it on its own terms. How different those terms are has already been demonstrated a month ago. Thus, traders are currently reacting to an improvement in the geopolitical background, but for further growth, clear signs of an actual end to the war must emerge.

The probability of a new decline in both pairs remains quite high, and all current discussions about a possible bullish advance are merely assumptions without confirmation or solid facts. Even today, the price may react to the "bearish" imbalance 17, and bears could resume their attack. At the same time, it is important to highlight a significant and rather rare pattern—the "Three Drives Pattern," marked on the chart with a triangle. It consists of three consecutive swings, each slightly higher or lower than the previous one. This pattern indicates the completion of a bearish impulse (in this case). Therefore, technical analysis suggests a reasonable chance of a bullish advance.

This week, a "bullish" imbalance may form if the pound maintains the same growth pace seen on Tuesday or Wednesday. As long as the bullish trend remains intact (above the 1.3012 level), I would focus more on bullish signals. However, at the moment, there are no bullish patterns or signals, and geopolitics could shift in favor of the bears at any time.

The news background on Wednesday did not support the bulls, but geopolitics unexpectedly came to their aid. Traders concluded that geopolitics remains more important than economic data, so the U.S. ADP and retail sales reports were ignored.

In the United States, the overall news background remains such that, in the long term, little can be expected other than a decline of the dollar. Even the war between Iran and the U.S. changes little in this regard. The situation for the dollar remains quite difficult in the long term and only favorable in the short term. The labor market continues to struggle, the economy is increasingly approaching a recession, and the Federal Reserve—unlike the ECB and the Bank of England—does not intend to tighten monetary policy in 2026. Last weekend, the fourth large-scale protest against Donald Trump took place across the United States. From an economic standpoint, there are no solid reasons for dollar growth.

A sustained bearish trend would require a strong and stable positive news background for the dollar, which is difficult to expect under Donald Trump. For now, geopolitics has been supporting the dollar for over a month, but this support will sooner or later fade. When that happens is uncertain, so it cannot be ruled out that the U.S. currency may continue to strengthen for another week, a month, or even several months.

News calendar for the US and the UK:

US – Initial Jobless Claims (12:30 UTC)

On April 2, the economic calendar contains only one entry, which is not particularly significant. The impact of the news background on market sentiment on Thursday may be negligible or absent.

GBP/USD forecast and trader advice:

For the pound, the long-term picture remains bullish, but there are currently no active bullish patterns. The recent sharp decline in the pair over the past few weeks was largely due to an unfavorable combination of circumstances. If Donald Trump had not initiated the conflict in the Middle East, we likely would not have seen such a strong rise in the dollar. I believe this decline may end just as unexpectedly as it began. However, at the moment, the bearish phase cannot yet be considered over.

In the near term, traders can only rely on signals within the "bearish" imbalance 17. If sell signals form, traders may consider selling the pound with targets around the 1.3000 level. Otherwise, I will wait for the formation of bullish patterns, signals, and a resumption of the bullish trend.