03.03.202610:42 Forex Analysis & Reviews: GBP/USD. March 3rd. The Pound Continues to Decline

The wave structure remains "bearish." The last completed upward wave failed to break the previous peak, while the new downward wave broke the previous low. To shift the trend to "bullish," a consolidation above the latest peak at 1.3573 or two consecutive bullish waves are required. The news background for the pound has been weak in recent months, and geopolitics is giving bears a clear advantage in the market.

On Monday, the only notable data release was the U.S. ISM index, and even that report supported the bears. Bulls somehow managed to stabilize the situation in the second half of the day, but on Tuesday the bears resumed their attack with renewed strength. It is now obvious to all traders why the dollar is rising and why riskier currencies are falling. In my view, the British pound and the euro cannot truly be considered risky currencies in the strict sense of the term. They are backed by fairly stable and strong economies. However, historically, when large-scale geopolitical conflicts emerge, the market prefers the old, reliable U.S. dollar. Thus, unexpectedly, the American currency has received strong support in 2026, although the beginning of the year did not promise anything positive for it. The news background is changing rapidly, and traders' attention has completely shifted from monetary policy and economic indicators to geopolitical events in the Middle East. Neither the United States, its allies, nor Iran are showing any willingness to sit down at the negotiating table.

On the 4-hour chart, the pair rebounded from the upper boundary of the descending trend channel and returned to the 1.3369–1.3435 support level. A rebound from this zone would once again favor the British currency and some growth toward 1.3795. A close below the 1.3369–1.3435 level would allow for expectations of continued decline toward the 1.3118–1.3140 area. No emerging divergences are currently observed on any indicator.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" category of traders became more bearish over the latest reporting week, which under current circumstances no longer appears accidental. The number of long positions held by speculators decreased by 14,802, while short positions declined by 134. The gap between long and short positions now stands at roughly 67,000 versus 124,000. In recent months, bears have more often dominated, although the situation with euro contracts is the exact opposite. I still do not fully believe in a sustained bearish trend for the pound, but everything now depends not on economic data or Trump's trade policy, but on the duration and scale of the war in the Middle East.

Over the past year, the pound appeared to be a safer currency compared to the dollar — more stable and with a clearer economic outlook. However, in recent months, a correction began while the bullish trend was still intact, and then the conflict in the Middle East started escalating almost daily. Negotiations on an agreement between the United States and Iran have failed, so the dollar is now rising due to geopolitical factors. How long the dollar continues to strengthen will depend on developments in the Middle East.

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

On March 3, the economic calendar contains no significant entries. The information background will have no impact on market sentiment on Tuesday, though news from the Middle East may emerge.

GBP/USD Forecast and Trading Advice:

Selling opportunities were available after an hourly close below the 1.3437–1.3470 level, targeting 1.3352–1.3362. That target has been reached. Short positions may be kept open with targets at 1.3294 and 1.3240 if a close below the 1.3352–1.3362 level occurs. Under current circumstances, I am not considering long positions.

Fibonacci levels are drawn from 1.3470–1.3010 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.