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On the hourly chart, GBP/USD staged a sharp reversal in favor of the pound on Wednesday and consolidated above the 50.0% Fibonacci retracement level at 1.3348. However, early Thursday, the bears attempted to regain control and pushed the pair back below the 1.3348 level. As a result, the decline may resume today, with downside targets at 1.3298 and 1.3238.
The wave structure remains bearish. The latest completed upward wave broke above the previous high, while the latest downward wave, which is still developing, has broken below the previous low. This suggests that the bears have regained control of the market. In my view, the 2026 bearish impulse has already run its course, and only geopolitical developments have prevented the bulls from extending their advance. At present, geopolitical tensions are once again weighing on risk-sensitive assets.
Wednesday's news flow finally allowed the bulls to recover some of their recent losses, but Thursday's events could significantly worsen the outlook. In just a few hours, the Bank of England will announce the outcome of its policy meeting, and the market currently views a dovish outcome as more likely than a hawkish one. The Bank of England is highly unlikely to deliver hawkish guidance. Consequently, the market has already begun pricing in the more accommodative scenario, which explains the pound's weakness early Thursday.
In my opinion, there is little reason to expect further monetary tightening in the UK with inflation currently standing at 2.6%. On the contrary, Governor Andrew Bailey and his colleagues may conclude that it would be appropriate to resume monetary policy easing in the second half of 2026. Such a decision would represent another bearish factor for the pound. Although the pound has posted solid gains in recent weeks, both the geopolitical and economic backdrop have once again turned less favorable. Therefore, based on the current news environment, a renewed decline remains a plausible scenario. However, more definitive conclusions should be postponed until after the Bank of England announces its decision.
On the 4-hour chart, GBP/USD rebounded from the 76.4% Fibonacci retracement level at 1.3277, reversed in favor of the pound, and advanced toward 1.3348 after the CCI indicator formed a bullish divergence. Today's price action will depend far more on the news flow than on the technical picture. From a longer-term perspective, the bulls have regained the initiative, but without sufficient fundamental support, sustaining the advance will be difficult.
The sentiment among the Non-commercial group became less bearish over the latest reporting week, although it remains bearish overall. The number of long positions held by speculative traders increased by 13,197, while short positions declined by 2,495. The current balance stands at approximately 64,000 long positions versus 119,000 short positions. The gap is narrowing, reducing the bears' advantage. Previously, bearish dominance was unquestioned, but the changing fundamental backdrop has made the outlook less one-sided.
I still do not believe in the resumption of a sustained bearish trend for the pound. However, in the near term, market direction will depend less on economic indicators, Trump's trade policy, or central bank monetary policy than on the duration, scale, and consequences of the conflict in the Middle East. Over recent months, markets had shifted toward expectations of peace, but negotiations between Iran and the United States collapsed before making meaningful progress. Moreover, there is no guarantee that they will resume anytime soon.
United Kingdom
United States
The economic calendar for July 30 includes seven key events, with the Bank of England meeting and Governor Andrew Bailey's speech expected to attract the greatest attention. As a result, fundamental developments could have a significant impact on market sentiment throughout the trading day.
Short positions may be considered if the pair closes below 1.3348 on the hourly chart, with downward targets at 1.3298 and 1.3238. Long positions may be considered if the pair consolidates above 1.3348, with upward targets at 1.3397 and 1.3458.
Fibonacci retracement levels are drawn from 1.3140–1.3557 on the hourly chart and from 1.3158–1.3655 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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