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On the hourly chart, the GBP/USD pair on Monday made a third rebound from the support level of 1.3177–1.3199, reversed in favor of the pound, and began a new upward movement toward the resistance level of 1.3341–1.3352. Thus, the 1.3177–1.3199 level is currently acting as a support point for GBP/USD. A consolidation of prices below it would allow for further decline of the pound toward the corrective level of 161.8% – 1.3016.
The wave situation has shifted back to "bearish." The last completed upward wave exceeded the previous peak by only a few pips, while the most recent downward wave confidently broke the previous low. The news background remains weak for the pound, while geopolitics provides bears with an almost complete advantage in the market. The war in Iran remains the main reason for the strengthening of the US currency in recent months. Bulls can only hope for the end of the war in the Middle East, a drop in oil prices, and a ceasefire by all parties involved.
On Monday, the news background could have supported bullish trading, but the US ISM Services PMI was ignored, as were many other reports in recent weeks. The ISM index showed a value of 54.0, which was below traders' expectations. Thus, in the second half of the day, the dollar could hardly count on support. Today, traders' attention will again focus on developments in the Middle East, as a new deadline set by Donald Trump expires today. If by evening the Strait of Hormuz is not reopened and Iran does not agree to a ceasefire demanded by Washington on its terms, we will most likely see another strike on Iranian infrastructure. Therefore, at the moment, the war in the Middle East is much closer to a new escalation than to resolution. Tehran is also ready to carry out new strikes on Middle Eastern infrastructure if attacked by the US and Israel, particularly targeting communication and technological facilities.
On the 4-hour chart, the pair consolidated above a downward trend channel, which brought absolutely no benefit to the bulls. A rebound from the 61.8% corrective level at 1.3340 was observed, followed by a reversal in favor of the US dollar and the beginning of a new decline. A consolidation below the Fibonacci level of 76.4% – 1.3215 will increase the likelihood of further decline toward the level of 1.3044. No emerging divergences are currently observed on any indicators.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category became slightly less bearish over the last reporting week. The number of long positions held by speculators increased by 4,845, while short positions decreased by 912. The gap between long and short positions is now effectively: 51,000 vs. 104,000. For six consecutive weeks, non-commercial traders actively increased selling and reduced buying, leading to a strong imbalance between long and short positions. In recent weeks, bears have dominated, which raises no questions given the geopolitical situation. I still do not believe in a long-term bearish trend for the pound, but now everything depends not on economic indicators, Trump's trade policy, or central bank monetary policy, but on the duration, scale, and consequences of the war in the Middle East. In recent months, a correction began while the bullish trend remained intact, and then the Middle East conflict began intensifying almost daily. Geopolitics remains the only driver behind the strengthening of the US dollar.
Economic Calendar for the US and the UK:
On April 7, the economic calendar contains one important entry. The impact of the news background on market sentiment may be present on Tuesday, but mainly in the second half of the day.
GBP/USD Forecast and Trading Tips:
Selling the pair is possible today if it consolidates below the 1.3177–1.3199 level on the hourly chart, with a target of 1.3016. Buying opportunities were available after a rebound from the 1.3177–1.3199 level with a target of 1.3341–1.3352. These positions can still be held open today.
Fibonacci levels are plotted from 1.3341–1.3866 on the hourly chart and from 1.3012–1.3868 on the 4-hour chart.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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