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The GBP/USD pair is showing growth on Monday that few could have expected on Saturday or Sunday. However, it became known overnight on Monday that a criminal case has been opened against Jerome Powell over excessive and unjustified spending on the renovation of Federal Reserve buildings, as well as knowingly false statements made to the U.S. Congress. After this, bears began to retreat sharply from the market, and the dollar returned to its favorite activity in the "Trump era" — falling. I would remind you that Trump attempted to dismiss the Fed Chair as early as last summer, but this is not so easy to do when you lack both the authority and legal grounds for dismissal. It took a long six months for the Department of Justice to review all documents and cost estimates and to deliver a verdict on the possible misuse of budget funds. The Department of Justice, by the way, has not yet reached such a conclusion, but the process has been launched. Now Powell will at least have to defend himself, and the markets responded with massive selling of the currency whose control (via the Fed) Trump is seeking to establish.
The "bullish" imbalance 12 currently remains the only viable pattern. If it is invalidated, this will not lead to an immediate cancellation of the bullish trend. It would only delay the pound's next ascent. However, at the moment, a new bullish signal may be formed within this pattern, as I warned last week. Bullish traders had to wait for help from Trump to move into a new offensive, but all's well that ends well. There are no other signals/liquidity grabs/patterns at this time.
The chart picture is now as follows. The bullish trend in the pound can be considered complete, but the bullish trend in the euro cannot. Both the euro and the pound may already form new bullish signals along the current trend today. Both European currencies were on the verge of a pause in the trend, but Donald Trump came to the rescue and tripped up the U.S. dollar once again. Thus, I continue to expect growth in the British pound.
There were no economic reports on Monday, but the market had plenty to react to. The criminal prosecution of Powell, which could turn into a prison sentence and a disgraceful dismissal from the Fed, is an event of global significance. To one degree or another, everyone understands that this is Trump's personal desire and revenge against the FOMC Chair in response to his refusal to pursue aggressive monetary easing. As a result, trust in the Fed will steadily decline, and with it, the U.S. dollar exchange rate.
In the United States, the overall news backdrop remains such that nothing but a decline in the dollar can be expected in the long term. The situation in the U.S. remains quite difficult. The shutdown lasted a month and a half; Democrats and Republicans agreed on funding only through the end of January, which expires in three weeks. U.S. labor market data continues to disappoint. The last three FOMC meetings ended with dovish decisions, and the latest data suggests that the pause in monetary easing will be short-lived. Trump's military aggression, threats toward Denmark, Mexico, Cuba, and Colombia, as well as the initiation of criminal proceedings against Jerome Powell, perfectly complement the current picture unfolding in the United States. In my view, the bulls have everything they need to continue a new offensive and achieve a return to last year's peaks.
A bearish trend requires a strong and stable positive news background for the U.S. dollar, which is difficult 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, despite the fairly sharp decline in September and October. Too many risk factors continue to hang like dead weight over the dollar. What exactly are the bears going to use to push the pound further down if a bearish trend is supposedly forming now? If new bearish patterns appear, a potential decline in the pound sterling can be reconsidered, but at the moment there are none.
News Calendar for the U.S. and the U.K.:
On January 13, the economic events calendar contains two entries, one of which is considered important. The impact of the news background on market sentiment on Tuesday will be present in the second half of the day.
GBP/USD Forecast and Trader Advice:
For the pound, the picture remains favorable for traders. Four bullish patterns have been worked out, signals have been formed, and traders can maintain long positions. I see no informational grounds for a sharp fall in the pound in the near future.
The resumption of the bullish trend could have been expected as early as from imbalance zone 1. At the moment, the pound has reacted from imbalance 1, imbalance 10, imbalance 11, and imbalance 12. Today, another bullish signal may be formed in imbalance 12. As a potential upward target, I am considering the 1.3725 level, but the pound may rise much higher in 2026. If bearish patterns form, the trading strategy may need to be revised, but at the moment there are no grounds for doing so.
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