10.04.202619:41 Forex Analysis & Reviews: GBP/USD Smart Money: Do Bulls Have Further Potential?

The GBP/USD pair has gained nearly 300 points this week. There is one main reason for this— a sharp drop in demand for the safe-haven U.S. dollar. As soon as real negotiations began between Washington and Tehran, and even a two-week ceasefire was reached, the market quickly started abandoning the dollar. It simply became unnecessary, as over the past month and a half it had been used as a risk-off safe haven.

I also mentioned in previous articles that an important and relatively rare "Three Drives Pattern" had formed, which triggered the upward movement. Thus, traders received a bullish signal, while the broader trend remained bullish throughout. Geopolitics supported the bulls, resulting in a nearly 300-point rally. At the moment, the ceasefire remains fragile, and the parties involved have yet to fully clarify who exactly the agreement applies to and where hostilities may still continue. The Strait of Hormuz remains blocked, as Iran accuses Israel and the U.S. of violating the ceasefire, while the U.S. accuses Iran of breaching agreements by planning to charge tankers passing through the strait. Nevertheless, the market believes that peace is possible. Another round of negotiations between the U.S. and Iran is expected soon.

The probability of a decline in both pairs remains relatively high, as the Middle East ceasefire is unstable. At the same time, the Three Drives Pattern, marked by a triangle on the chart, allowed bulls to go on the offensive—which is already a positive development. This pattern consists of three successive swings, each slightly lower than the previous one, signaling the exhaustion of a bearish impulse (in this case). Thus, technical analysis suggests decent chances for further growth of the pound, though bulls still require support from geopolitics. A bullish imbalance is forming this week, which will provide future opportunities to open new long positions.

The economic news background on Friday did not support bulls, yet they continued pushing higher due to momentum and gradually improving geopolitical conditions. The U.S. inflation report showed a sharp acceleration in consumer prices, which could force the Federal Reserve to consider tightening monetary policy. However, like many other recent factors, this was largely ignored by traders.

In the United States, the overall backdrop suggests that, in the long term, little supports a stronger dollar. Even the conflict with Iran does not significantly change this outlook. The situation for the U.S. currency remains challenging in the long term and only favorable in the short term. The labor market continues to weaken, the economy is increasingly approaching recession, and unlike the ECB and the Bank of England, the Federal Reserve is not planning monetary tightening in 2026. Additionally, a fourth major wave of protests against Donald Trump has taken place across the country. From an economic standpoint, there are no solid reasons for sustained dollar growth.

A bearish trend would require a strong and consistent positive backdrop for the dollar, which is difficult to expect under Donald Trump. Geopolitics has supported the dollar for over a month, but this support will eventually fade. It is hard to say when exactly—meaning the dollar could still rise for weeks or even months—but it will not last indefinitely.

News Calendar for the U.S. and the U.K.

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

On April 13, the economic calendar contains only one secondary event. The news background is unlikely to influence market sentiment on Monday, as traders continue to focus primarily on geopolitical developments.

GBP/USD Forecast and Trading Tips

For the pound, the long-term outlook remains bullish, but there are currently no fresh bullish patterns. Only the Three Drives Pattern previously signaled the potential for growth. The sharp decline in recent weeks was largely due to unfortunate circumstances—namely geopolitical escalation. Without the conflict initiated by Donald Trump in the Middle East, such a strong dollar rally would likely not have occurred.

At present, the bearish phase cannot yet be considered fully over. Price may still sweep liquidity from the last two bullish swings, and the Middle East ceasefire could fail. In that case, bearish pressure would resume.

In the near term, traders can expect new bullish patterns to emerge. A bullish imbalance forming this week will provide future opportunities for long positions. If a full and stable ceasefire is achieved (not the fragile one currently in place), the pound could continue rising toward yearly highs.