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Overall, the GBP/USD pair continues to decline, but I believe this downward move may already be nearing completion. Why? First, in my view, the latest rally in the US dollar was not fully justified by the fundamental backdrop. The geopolitical conflict in the Middle East has ended, yet it was the primary driver of the dollar's strength throughout 2026. Seeing the dollar rise first because of the war and then continue rising after the conflict ended is, at the very least, unusual. Second, the FOMC meeting and the Fed's hawkish stance could certainly have supported the dollar last Wednesday and even Thursday, but not for an entire week. If not for the news of Keir Starmer's resignation last Monday, GBP/USD would likely have fallen even further. Therefore, I do not believe the news flow alone explains the pound's decline.
Technical analysis, however, now suggests that the pound has room to recover at least toward the 1.3322 level. Price reacted to bearish imbalance 22, but the response was weak. Before that, price swept liquidity below the April 6 low and then below the March 31 low. As a result, we have a weak reaction to the bearish pattern alongside two bullish liquidity grabs. At the very least, a corrective rebound should occur. Considering that the dollar still lacks compelling reasons for a prolonged uptrend—and has already posted an impressive rally in 2026—I believe the bears may struggle to extend their offensive. However, traders should always rely on technical analysis, which reflects actual market behavior. If no bullish patterns or signals emerge, there is no reason to open long positions. In that case, traders should wait for the market's reaction to imbalance 21.
At present, the market remains cautious regarding the agreement between Iran and the United States. Nevertheless, it can now be said that the active phase of the conflict has officially ended, at least for the time being. The Fed triggered a strong rally in the US dollar, but I still do not understand what is driving the bears to continue selling the pound. In my opinion, the broader trend remains bullish despite this year's sharp decline, which lacks a convincing fundamental explanation.
The technical picture is currently as follows. Last week, price reacted to bearish imbalance 22, but the response was weak, suggesting that the current bearish impulse may be approaching its final stage. I would also highlight the liquidity sweeps below the two most recent lows (marked by the red lines), which warn of a possible bullish reversal.
There was no significant economic news on Monday, while geopolitical headlines remained mixed and often contradictory. Overall, the geopolitical backdrop should now be supporting risk-sensitive currencies rather than the US dollar. Perhaps it simply took the market two weeks to recognize this.
The broader fundamental backdrop still leads me to expect nothing other than long-term weakness in the US dollar. Neither the conflict between Iran and the United States nor the possibility of additional Fed rate hikes in 2026 changes that view. Geopolitical tensions temporarily reminded the market of the dollar's safe-haven status, but the conflict has ended—or is at least moving toward a resolution. The Fed's intention to raise interest rates in 2026 is certainly supportive for the dollar, but tighter monetary policy will also slow the US economy. Moreover, Kevin Warsh was appointed by Donald Trump to lead the FOMC with objectives that extend beyond simply maintaining restrictive policy. I do not believe the Fed's tightening will develop into a prolonged hiking cycle. Therefore, in my opinion, any appreciation of the US dollar is temporary rather than the beginning of a lasting trend.
United Kingdom
United States
The June 30 economic calendar contains only two releases, neither of which I consider particularly important. As a result, the economic news flow is unlikely to have a significant impact on market sentiment on Tuesday.
From a long-term perspective, the outlook for the pound remains bullish, while the reaction to bearish imbalance 22 resulted only in a limited bearish move. A fresh sell signal was generated this week, but considering that GBP/USD has traded sideways for nearly a year (on the weekly chart), the current decline can only be explained by technical factors. Within a trading range, price can move in either direction without a strong fundamental catalyst. Since the latest dollar rally lacks a convincing explanation, the current move appears to be a technical fluctuation within a horizontal range.
The pound could still decline toward the bullish trend invalidation level at 1.3007, but that would require new bearish patterns and signals to emerge. For now, the two recent liquidity sweeps favor the bulls. If a bullish pattern forms, buyers will have a much stronger foundation for launching a new upward move.
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