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On the hourly chart, GBP/USD declined to the 50.0% Fibonacci retracement level at 1.3408 on Wednesday before rebounding and reversing in favor of the pound. As a result, the upward movement may continue today toward the resistance level of 1.3454–1.3466, which bullish traders have failed to break through on several recent occasions. A close below the 1.3408 level would allow traders to anticipate a renewed decline toward the support level of 1.3349–1.3355.
The wave structure remains bearish, as bulls still lack sufficient positive geopolitical news to launch a sustained advance. The most recent completed upward wave failed to break the previous high, while the latest downward wave did not break the previous low. Geopolitical developments have recently supported the bulls, but hopes for an agreement between Iran and the United States are once again fading. The bearish trend can be considered complete only after the May 25 high is surpassed.
Wednesday's news backdrop favored the bears, supported by strong U.S. economic data on the labor market and business activity. However, the market is driven by more than economic indicators alone. Yesterday, Iranian Foreign Minister Abbas Araghchi stated that no meaningful progress had been made in negotiations with Washington this week. The announcement had a sobering effect on optimistic traders who continue to place faith in Donald Trump's statements.
According to the U.S. president, the two sides had already agreed on 95% of the text of a future deal two weeks ago. It now appears that there has been no actual progress in the negotiations. Moreover, the talks are being conducted exclusively through intermediaries and could collapse at any moment, given the ongoing missile attacks by both sides across the Middle East. Naturally, there is also no prospect of reopening the strait in the near future.
As a result, the U.S. dollar is once again benefiting from demand as a safe-haven currency. The only factor preventing GBP/USD from entering a new bearish trend is the market's growing skepticism toward virtually all geopolitical reports. Investors no longer trust either Trump's statements or official comments from Tehran, as the messages frequently contradict one another. Traders are increasingly unwilling to speculate about which reports are accurate and which are not. Until greater clarity emerges, GBP/USD may remain confined to a relatively narrow trading range.
On the 4-hour chart, GBP/USD rebounded from the resistance level of 1.3482–1.3514, suggesting the potential for a decline toward the 23.6% Fibonacci retracement level at 1.3327. However, price movements are likely to be driven by geopolitical developments rather than technical analysis in the near term. Technical analysis should therefore be viewed only as a supplementary tool. No emerging divergences are currently observed on any indicators.
Commitments of Traders (COT) Report
Sentiment among the Non-commercial category became slightly less bearish during the latest reporting week. The number of long positions held by speculators decreased by 10,097, while short positions fell by 13,006. The gap between long and short positions now stands at approximately 58,000 versus 119,000.
Bears have dominated the market in recent months, which comes as no surprise given the geopolitical situation in the Middle East and the political crisis in the United Kingdom. Their advantage currently exceeds two-to-one.
I still do not fully believe in a sustained bearish trend for the pound. However, in the near term, market direction will depend less on economic indicators, Trump's trade policies, or central bank monetary policy, and more on the duration, scale, and consequences of the conflict in the Middle East. In recent weeks, the market has adjusted to the prospect of a prolonged conflict, but recent developments suggest that a ceasefire may eventually be achieved, although the process is unlikely to be quick or easy.
Economic Calendar
United States - Initial Jobless Claims (12:30 UTC)
The economic calendar for June 4 contains only one release, which is unlikely to attract significant market attention. Therefore, the impact of economic data on market sentiment is expected to be minimal on Thursday.
GBP/USD Forecast and Trading Recommendations
Short positions were possible following a rebound from the 1.3454–1.3466 resistance level on the hourly chart, with targets at 1.3408 and 1.3349–1.3355. The first target has already been reached.
Long positions may be considered today following a rebound from the 1.3408 level, targeting the 1.3454–1.3466 resistance level. Alternatively, traders may consider buying the pair on a close above 1.3454–1.3466, with an upward target of 1.3526–1.3539.
Fibonacci retracement levels are plotted from 1.3158 to 1.3655 on the hourly chart and from 1.3866 to 1.3158 on the 4-hour chart.
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