03.02.202618:31 Forex Analysis & Reviews: GBP/USD. Smart Money. The Dollar Remains an Outsider

The GBP/USD pair also reversed in favor of the U.S. dollar and returned to its bullish imbalance 14. As I mentioned, the fundamental justification for the pair's decline raises some questions, but we should not forget that in the euro pair the price worked off a weekly bearish imbalance and produced a fairly logical reaction. Since the euro and the pound move in the same direction most of the time, it is not surprising that the pound also declined over the past few days.

However, quotes have now reached bullish imbalance 14. From here, either the price will react to this pattern and traders will receive a new bullish signal, or the pattern will be invalidated, in which case the dollar will continue its contradictory rise. From the standpoint of the 2026 news background, it is difficult for me to imagine a prolonged bearish offensive. Still, it cannot be ruled out with absolute certainty. In my view, the most workable strategy for this week is to wait for the reaction of the euro and the pound to their bullish imbalances.

Since the bullish trend in the euro remains intact, in my opinion the bullish trend in the pound also remains intact. I cannot imagine a bullish trend in the euro simultaneously with a bearish trend in the pound. Imbalance 14 acts not only as a zone of interest for bulls but also as a support zone for the pound. That is why its invalidation would signal weakness in bullish intentions, which could allow bears to go on the offensive. The fundamental grounds for the pair's decline raise questions, but market moves do not always coincide with economic data and major events.

There was no significant news background on Tuesday, but something else is more important now. The U.S. Nonfarm Payrolls report and unemployment rate will most likely not be available this week. A new "shutdown" has begun in the United States. Although most experts believe it will end this week, these reports have disappeared from the economic calendars. The situation may improve by Friday if the shutdown ends, but for now the pound will have to rely only on the Bank of England meeting and the dynamics of the euro.

In the United States, the overall news background remains such that, in the long term, nothing but dollar weakness can be expected. The situation in the U.S. remains quite difficult. U.S. labor market data continue to disappoint or be ignored by the market. The last three FOMC meetings ended with dovish decisions, and the latest data suggest that the pause in monetary policy easing will be short-lived. Trump's military aggression, threats toward Denmark, Mexico, Cuba, Colombia, Iran, EU countries, Canada, and South Korea, the criminal case against Jerome Powell, and the new shutdown perfectly complement the current picture of the American political crisis. In my view, bulls have everything they need to continue their offensive throughout 2026 (of course, with pauses).

A bearish trend would require a strong and stable positive news background for the dollar, which is hard to expect under Donald Trump. Moreover, the U.S. president himself does not need a strong dollar, as the trade balance would remain in deficit in that case. Therefore, I still do not believe in a bearish trend for the pound. Too many risk factors continue to weigh heavily on the dollar. What would bears use to push the pound lower? If new bearish patterns appear, a potential decline in the pound sterling could be reconsidered, but at the moment there are none.

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

• United Kingdom – Services PMI (09:30 UTC)
• United States – ADP Employment Change (13:15 UTC)
• United States – ISM Services PMI (15:00 UTC)

On February 4, the economic calendar contains three entries, but only the U.S. ones are likely to attract traders' interest. The impact of the news background on market sentiment on Wednesday may be present, but only in the second half of the day.

GBP/USD Forecast and Trading Advice:

For the pound, the picture remains clear; what is missing are new buy signals. The bulls have launched a new offensive that threatens to be quite long and serious.

Since the bullish trend is undeniable, traders can only trade to the upside using clear patterns and clear signals. In the near future, traders may expect the formation of a new bullish signal within imbalance 14. I previously considered the 1.3725 level as a potential upward target; this level has been reached, but the pound may rise much higher in 2026. There are no limits—especially considering the events of the first month of the year. If bearish patterns form, sell trades may also be considered, but within a bullish trend I prefer buying rather than selling.