GBP/USD continues to move higher and has a strong chance this week of invalidating Bearish Imbalance 20 while potentially forming a new bullish imbalance. Without question, the current geopolitical backdrop is supporting buyers. However, it should be noted that the pound's advance remains unconvincing and could even evolve into a range-bound market. In fact, sterling has been trading within a horizontal channel between 1.3305 and 1.3505 for several weeks.
The upward movement remains weak, the bearish pattern has failed to deliver, and no bullish patterns have formed. If an agreement between Iran and the United States is signed before the end of the week, buyers will find it much easier to maintain upward pressure. If not, no meaningful bullish advance is likely to emerge. Under current conditions, traders can only wait for new patterns to form, as there are currently no actionable setups available. It is also important to closely monitor geopolitical developments, as any new pattern can be invalidated almost instantly by breaking news.
Last week provided a clear example. Sellers were preparing for another decline from Bearish Imbalance 20, but Donald Trump unexpectedly announced the prospect of a peace agreement with Iran over the weekend instead of the previously anticipated military strikes. As a result, sellers quickly retreated despite the presence of Bearish Imbalance 20.
The situation in the Middle East has begun to improve. Historically, the U.S. dollar performs better during periods of geopolitical tension than either the euro or the pound. Therefore, if the conflict in the Middle East moves toward resolution, both the euro and the pound could receive additional support. At present, however, the market remains cautious regarding reports of a potential agreement. For example, Israel indicated on Monday that its interests had not been fully taken into account, which could potentially lead to renewed tensions in the region. If that occurs, the efforts made by both the United States and Iran could prove unsuccessful.
In my view, the broader trend remains bullish despite the pair's sharp declines earlier this year. The ceasefire in the Middle East remains in place and could be extended. The Strait of Hormuz remains subject to restrictions, while the nuclear issue remains unresolved. The situation continues to shift between improvement and deterioration. As a result, market participants are increasingly uncertain about which developments to trust.
From a technical perspective, all currently available and valid patterns have either been completed, invalidated, or are likely to become invalidated in the near future. I continue to expect another bullish impulse, but this will require the successful signing of an agreement between Iran and the United States. Therefore, traders should wait both for a positive resolution of developments in the Middle East and for the formation of new trading patterns.
The economic calendar had virtually no impact on Monday. In the United States, the May industrial production report was released, but it attracted little interest from traders. The pound started the day with a solid advance, but by midday buyers had become more cautious and momentum faded. Economic data had no meaningful impact on market sentiment during Monday's session. This week will feature numerous important events, requiring traders to closely monitor market developments.
The broader fundamental backdrop remains such that, from a long-term perspective, I continue to expect weakness in the U.S. dollar. Even the conflict involving Iran does little to change that view. Geopolitical tensions temporarily reminded investors of the dollar's safe-haven status, but the overall outlook for the U.S. currency remains less favorable.
If the U.S. economy gains momentum in 2026, the Federal Reserve resumes its monetary tightening cycle, and tensions involving Iran evolve into a prolonged conflict, then the dollar could realistically target the 1.3100–1.3000 level against the pound. However, in my opinion, the long-term outlook for the U.S. dollar could not have changed solely because of one strong Nonfarm Payrolls report, and the Federal Reserve has not yet provided any signals indicating a willingness to tighten monetary policy further.
News Calendar for the United States and the United Kingdom:
- United States – Building Permits (12:30 UTC).
- United States – Housing Starts (12:30 UTC).
The economic calendar for June 16 contains only one event that I do not consider significant. Therefore, the impact of economic data on market sentiment on Tuesday is expected to be absent or extremely limited.
GBP/USD Forecast and Trading Recommendations:
The long-term outlook for the pound remains bullish, while all bearish patterns have either been invalidated or are no longer relevant. Therefore, traders should focus on the emergence of new patterns, which will provide clearer guidance regarding the next directional move.
At the same time, geopolitical developments remain capable of driving the pound in either direction, and the conflict in the Middle East has not been fully resolved. As a result, opening long positions without clear trading signals remains premature. If an agreement is ultimately signed, the pound has every chance of advancing toward at least the 1.3655 level.
