11.05.202612:49 Forex Analysis & Reviews: GBP/USD: May 11th – The Dollar Was Unimpressed by the Payrolls Report

On the hourly chart, the GBP/USD pair on Friday recorded its fourth rebound from the 1.3632–1.3641 resistance level over the past six days. As a result, another reversal in favor of the U.S. dollar occurred, along with consolidation below the 61.8% Fibonacci retracement level at 1.3596, which allows for expectations of continued decline toward the 1.3513–1.3526 support level. A rebound from this zone would make it possible to expect a reversal in favor of the British pound and renewed growth toward the 1.3632–1.3641 level.

The wave structure remains bullish. The latest completed upward wave broke above the previous peak, while the latest downward wave failed to break the previous low. Geopolitical developments gave the bears almost complete control of the market for two months, but the geopolitical backdrop later shifted and now provides greater support for the bulls. At present, the ceasefire between Iran and the United States remains in place, but the situation is moving toward escalation and prolonged confrontation. Bulls may struggle to launch strong attacks in the coming weeks, but there are currently no major reasons for them to retreat either.

Friday's news background played into the hands of the bears. The Nonfarm Payrolls report, unemployment rate, and the University of Michigan consumer sentiment index were not unanimously positive. However, the number of new jobs created reached 115,000 compared to the forecast of 62,000. The unemployment rate remained unchanged, in line with market expectations. Only the consumer sentiment index came in slightly weaker than expected — 48.2 versus 49.5. Still, few would doubt that the Nonfarm Payrolls report carries more weight than the Michigan sentiment index. Therefore, the dollar should have strengthened earlier than Monday night, but it only did so today — and solely because of geopolitics, as tensions in the Middle East once again threaten to escalate. In my view, the conclusions are obvious. The market continues to ignore all factors unrelated to the war in the Middle East, negotiations, and the ceasefire. Last week, we twice saw the dollar rise when missiles were launched in the Persian Gulf, and twice saw the dollar fall when reports emerged about continued negotiations and the preservation of the ceasefire. Therefore, I expect that this week the economic backdrop will also be ignored, while traders continue to monitor geopolitical developments and headlines.

On the 4-hour chart, the pair managed to consolidate above the descending trend channel, which allows expectations for a fully developed bullish trend. Consolidation above the 61.8% Fibonacci level at 1.3597 would support expectations for continued growth toward the 76.4% retracement level at 1.3700. However, the chart structure on the hourly timeframe is currently more informative. I recommend paying closer attention to the hourly chart. No new developing divergences are observed today.

Commitments of Traders (COT) Report:

The sentiment among the "Non-commercial" category of traders became more bearish over the latest reporting week. The number of Long positions held by speculators increased by 2,996, while the number of Short positions rose by 6,265. The gap between Long and Short positions now stands at approximately 62,000 versus 126,000. For six consecutive weeks in February and March, non-commercial traders actively increased their short positions and reduced long positions, creating a strong imbalance between Long and Short exposure. Bears have dominated in recent months, which comes as no surprise given the geopolitical environment.

I still do not believe in a long-term bearish trend for the British pound, but everything now 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 weeks, the market had shifted toward expectations of de-escalation, but the latest developments suggest that a full ceasefire remains far away and that the conflict could resume at any moment. In that case, the bears' advantage could become even stronger.

Economic Calendar for the U.S. and the U.K.:

• U.S. Existing Home Sales (14:00 UTC)

The economic calendar for May 11 contains only one secondary event. The impact of the economic background on market sentiment on Monday is expected to be extremely limited.

GBP/USD Forecast and Trading Tips:

Selling positions were possible following another rebound on the hourly chart from the 1.3632–1.3641 level, targeting 1.3513–1.3526. These trades can still be held open today. Buying opportunities may emerge after a rebound from the 1.3513–1.3526 level with a target at 1.3632–1.3641. Long positions may also be considered if the pair closes above the 1.3632–1.3641 level, targeting 1.3700.

Fibonacci retracement grids are based on the 1.3866–1.3158 range on both the hourly and 4-hour charts.