29.06.202603:55 Forex Analysis & Reviews: GBP/USD Review. June 29. NFP, European Inflation, and Geopolitics

The GBP/USD currency pair on Friday also attempted to initiate an upward movement but failed to overcome even the moving average. The British pound has been falling in recent weeks for exactly the same reasons as the European currency: for unknown reasons. We have previously suggested that the underlying truth lies either in the purely speculative nature of the movement (where traders buy dollars because they are rising, and they are rising because they are being bought) or in some information (for example, regarding the prolonged conflict in the Middle East) that is simply not accessible to most traders. We do not believe that the issue with the British pound is due to the Federal Reserve's tightening stance or the political crisis in the UK.

Next week, a considerable number of important events will take place. As the new month begins, the U.S. will release a set of reports on the labor market and unemployment. However, will it hold any significance? Let's recall that the market ignored the end of the war in the Middle East a week ago and responded with purchases of the British currency in response to Keir Starmer's resignation. Therefore, it is clear that the dollar's rise is not due to geopolitics (as publicly available information indicates) and not due to the British crisis (the European currency is also falling). The last NFP report was very strong, as was the last GDP report. However, currently, the dollar feels strong enough without their assistance. If the current market sentiment persists, any event, any news will be interpreted in favor of the dollar. Any opposing data will either provoke slight pullbacks or be entirely ignored.

In the current circumstances, following two weeks of inexplicable growth and the resumption of the war in the Middle East, we believe that macroeconomic data will not be the top priority for market participants. Reports, of course, can influence trader sentiment locally, but only at that level. In our view, it is crucial to pay attention to the weekly timeframe. Essentially, the GBP/USD pair has been trading between 1.3150 and 1.3780 for over a year. This means it is within a sideways channel. Currently, it has approached the lower boundary of this channel, so an upward reversal is possible for purely technical reasons. In the long term, the upward trend remains intact, having started back in September 2022.

Thus, we, as before, do not believe in the formation of a dollar trend in the near future. Of course, geopolitics may continue to push the pair lower, but if we consider logical, predictable movement, there are still very few reasons for the dollar to rise. The Fed may raise the key rate one or two times, but the Bank of England may also resume tightening monetary policy, as many experts forecast a rise in inflation in the second half of the year. The conflict in the Middle East may persist indefinitely, and we likely would not even pay attention to the next negotiations or assurances of a near agreement. Any agreements are violated a few days later, and negotiations do not guarantee reaching a consensus on any issues.

The average volatility of the GBP/USD pair over the last five trading days as of June 29 is 71 pips. For the pound/dollar pair, this value is "average." On Monday, June 29, we thus expect the pair to move within the range limited by levels 1.3123 and 1.3265. The upper channel of the linear regression is moving sideways, indicating uncertainty about the trend. The CCI indicator has entered the oversold area twice and formed two "bullish" divergences, suggesting a possible end to the downward trend, but the market is currently ignoring these factors.

Nearest Support Levels:

S1 – 1.3184

S2 – 1.3123

S3 – 1.3062

Nearest Resistance Levels:

R1 – 1.3245

R2 – 1.3306

R3 – 1.3367

Trading Recommendations:

The GBP/USD currency pair maintains a downward trend. Trump's policies continue to weigh on the U.S. economy; therefore, we do not expect long-term growth in the U.S. dollar. The year 2026 is shaping up to be very positive for the dollar due to geopolitics and, more recently, the Fed's readiness to raise the key rate. However, on the weekly timeframe, a flat formation is maintained between 1.3150 and 1.3780, within a four-year upward trend. Long positions targeting 1.3306 and 1.3367 can be considered when the price is above the moving average, but they are not currently a priority. The price being below the moving average allows for continued trading downwards with a target of 1.3123.

Explanation of Illustrations:

Linear regression channels help determine the current trend. If both are directed in the same way, the trend is currently strong;

The moving average line (settings 20.0, smoothed) defines the short-term trend and the direction in which trading should proceed;

Murray levels are target levels for movements and corrections;

Volatility levels (red lines) indicate the probable price channel within which the pair will move in the coming day based on current volatility metrics;

The CCI indicator – its entry into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal is approaching in the opposite direction.