07.08.202604:12 Forex Analysis & Reviews: GBP/USD Overview. August 7. Judgment Day for the Dollar

The GBP/USD currency pair also showed absolutely no interesting movements on Thursday, which is not surprising given the complete lack of important macroeconomic and fundamental events. It is also worth noting that geopolitical issues continue to bore the market, as there are essentially no events unfolding. There are only daily and hourly statements from Donald Trump, who continues to insist that a deal regarding the Strait of Hormuz will be concluded soon. However, traders have already figured out that the US has no part in this deal. Moreover, Iran and Oman are set to negotiate control over shipping in the Strait of Hormuz. At the same time, the United States is ready to lift the naval blockade of Iranian ports without any agreements if Oman and Iran reach a consensus. In simple terms, America is not even being invited to the negotiating table—not America, but rather Donald Trump and his delegation personally.

The US president also continues to insist that negotiations over the nuclear agreement will begin immediately after the deal on the Strait of Hormuz. Frankly, we have significant doubts about this. Everything currently happening in the Middle East indicates Iran's complete dominance. The US has no remaining cards to play, even militarily. Just yesterday, US Secretary of Defense Pete Hegseth announced a shortage of air defense missiles and long-range rockets. Moreover, this information became public, which greatly upset Trump, who naturally was not interested in airing the US's dirty laundry. However, the key point is not the accessibility of this information; rather, the US has nothing left to fight Iran with. The strongest and supposedly first army in the world has been unable to secure any concessions from Iran in five full months, and now it has no means left to continue applying pressure on Tehran. Ironic, isn't it?

Thus, Iran is now the true "master of the negotiations." It has one undeniable trump card that cannot expire or disappear: the Strait of Hormuz. Any violation of the deal/ceasefire terms, any new attack on Iran, or further ultimatums with threats directed at Iran will mean that the Strait of Hormuz will once again be closed. For Trump, a closed Hormuz is equivalent to a premature defeat in the congressional elections. In this scenario, oil prices will rise again, fuel costs in the United States will soar, and inflation will accelerate once more. Americans very much dislike it when prices rise, but their incomes do not. Therefore, in the upcoming midterm elections, we could see a repetition of the situation from six years ago, when American voters voted not "for" Joe Biden but "against" Trump. The only difference now is that this time they will vote "against" all Republicans.

This week, we only have to wait for the Nonfarm Payrolls and unemployment reports, which will determine the dollar's near-term fate. As noted, strong data will support the dollar not only on Friday but also next week. Weak data, conversely, will put downward pressure on it.

The average volatility of the GBP/USD pair over the last five trading days is 61 pips, which is considered "average" for this pair. On Friday, August 7, we expect movement within the range bounded by 1.3390 and 1.3512. The upper linear regression channel points downward, indicating a prevailing downtrend. The CCI indicator has entered the overbought territory twice, which could trigger a new downward correction.

Closest Support Levels:

S1 – 1.3428

S2 – 1.3367

S3 – 1.3306

Closest Resistance Levels:

R1 – 1.3489

R2 – 1.3550

R3 – 1.3611

Trading Recommendations:

The GBP/USD currency pair maintains an upward trend. Trump's policies will continue to put pressure on the US economy, so we do not expect long-term growth in the US dollar. The year 2026 is proving to be super-positive for the dollar due to geopolitical influences, but every fairytale eventually comes to an end. The weekly timeframe shows a range between 1.3150 and 1.3780 within a four-year upward trend, supporting the expectation of continued growth for the British currency in the medium term. Long positions with targets at 1.3512 and 1.3550 can be considered when the price is above the moving average. If the price is below the moving average line, short positions with targets at 1.3390 and 1.3367 are advisable.

Explanations for Illustrations:

• Linear regression channels help determine the current trend. If both are pointing in the same direction, the trend is strong.
• The moving average line (settings: 20, 0, smoothed) defines the short-term trend and the direction in which trading should currently proceed.
• Murray levels – target levels for movements and corrections.
• Volatility levels (red lines) – the probable price channel in which the pair will move over the next 24 hours, based on current volatility indicators.
• The CCI indicator – its entry into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal in the opposite direction is approaching.