On the hourly chart, GBP/USD rebounded from the 1.3454–1.3466 resistance level on Friday, reversed in favor of the U.S. dollar, and fell below the 1.3349–1.3355 support level. This consolidation below the zone suggests further downside toward the 76.4% Fibonacci retracement level at 1.3277. A close above the 1.3349–1.3355 level would favor the pound and allow for a moderate rise toward the 50.0% Fibonacci level at 1.3408.
The wave structure remains bearish, as bulls lack positive geopolitical developments to launch a sustained advance. The latest completed upward wave failed to break the previous peak, while the latest downward wave broke below the previous low. Geopolitical developments remain highly uncertain at this stage, leaving neither bulls nor bears with a clear advantage. The bearish trend can only be considered complete after a break above the June 5 high.
The news background was entirely on the side of the bears on Friday, which led to the sharp decline. However, a new week has begun, and traders will need new reasons to open positions. The first important event of the week is scheduled for Wednesday. On that day, the U.S. inflation report for May will be released, and it is likely to shape expectations regarding the Federal Reserve's policy outlook ahead of next week's meeting. The Consumer Price Index may show acceleration for the third consecutive month. Analysts expect it to rise to 4.2%. Thus, inflation could exceed the Federal Reserve's target by more than two times in May. In my view, this would be sufficient for the market to begin pricing in monetary policy tightening by the Fed before the end of 2026. A rate hike in June remains unlikely, but the new FOMC President, Kevin Warsh, may indicate that the regulator is prepared to take such a step at its next meeting. If inflation slows, the Fed is likely to maintain its wait-and-see approach, reducing bears' confidence. Therefore, the higher the inflation reading in the United States, the more supportive it will be for the dollar.
On the 4-hour chart, GBP/USD rebounded from the 1.3482–1.3514 resistance level and declined toward the 23.6% Fibonacci retracement level at 1.3327. Consolidation below this level would allow bears to continue their advance toward the next Fibonacci level at 1.3159 (0.0%). A rebound from the 1.3327 level would favor the pound and a moderate recovery toward 1.3429. No emerging divergences are currently observed on any indicator.
Commitments of Traders (COT) Report:
Sentiment among the Non-commercial group became less bearish during the latest reporting week. The number of long positions held by speculators decreased by 4,291, while the number of short positions fell by 13,471. The gap between long and short positions now stands at approximately 53,000 versus 110,000. Bears have dominated in recent months, which comes as no surprise given the geopolitical situation in the Middle East and the political crisis in the United Kingdom. The bears' advantage currently exceeds two to one.
I still do not believe in a sustained bearish trend for the pound. However, in the near term, market direction will depend not on economic indicators, Trump's trade policy, or central bank monetary policy, but rather on the duration, scale, and consequences of the war in the Middle East. In recent weeks, the market has adjusted to expectations of a prolonged conflict, but recent developments suggest that a ceasefire may still be reached, although the process is unlikely to be easy or quick.
News Calendar for the United States and the United Kingdom:
The economic calendar for June 8 contains no notable events. Therefore, the economic background is unlikely to influence market sentiment on Monday.
GBP/USD Forecast and Trading Tips:
Short positions were possible after the rebound from the 1.3454–1.3466 resistance level on the hourly chart, with targets at 1.3408 and 1.3349–1.3355. Both targets have been reached, and these positions may remain open with a target at 1.3277. Long positions may be considered today if the pair consolidates above the 1.3349–1.3355 level, targeting 1.3408.
Fibonacci grids are drawn from 1.3158–1.3655 on the hourly chart and from 1.3866–1.3158 on the 4-hour chart.