On the hourly chart, the GBP/USD pair reversed in favor of the British pound on Monday and advanced toward the 1.3268–1.3277 resistance level. A rebound from this zone favored the U.S. dollar and a resumption of the decline toward the 1.3158–1.3177 support level. Consolidation above the 1.3268–1.3277 level would allow traders to expect a continuation of the upward move toward the next resistance level at 1.3349–1.3355.
The wave structure turned bearish again following the FOMC meeting. The latest completed upward wave broke above the previous peak, while the new downward wave broke below the previous low. It is difficult to say how long the bears will maintain their strength this time, as support for the dollar may prove to be temporary. If we set aside the wave analysis, the bears continue to maintain full control of the market. However, once the conflict in the Middle East is resolved, it is unlikely that the dollar will be able to count on sustained long-term growth.
The news background unexpectedly supported bullish traders on Monday. Pound traders ignored geopolitical developments and focused entirely on the resignation of UK Prime Minister Keir Starmer. It should be noted that Starmer resigned voluntarily after his party suffered a crushing defeat in the elections a month ago and following repeated calls for him to step down. In the near future, the Labour Party will elect a new leader, who is likely to be Greater Manchester Mayor Andy Burnham. Thus, not every political crisis is necessarily negative for a national currency. Sometimes political changes can serve as a reason for optimism.
What lies ahead for the British pound? The market is unlikely to continue pricing in Starmer's resignation for several more days. Therefore, attention may shift back to geopolitical developments, which at present should support both the pound and the euro. However, the market is currently showing the opposite reaction. Bulls failed to overcome the 1.3268–1.3277 resistance level, which means the bears may launch another attack on Tuesday.
On the 4-hour chart, GBP/USD advanced to the 76.4% Fibonacci retracement level at 1.3277. A rebound from this level would favor the U.S. dollar and trigger a new decline toward the 100.0% Fibonacci level at 1.3159. Consolidation above 1.3277 would suggest further gains for the pound. No emerging divergences are currently visible on any indicator.
Commitments of Traders (COT) Report:
Sentiment among the "Non-commercial" category of traders became more bearish during the latest reporting week. The number of Long positions held by speculators decreased by 3,700, while the number of Short positions increased by 3,672. The gap between Long and Short positions now effectively stands at 42,000 versus 114,000. Bears have dominated the market in recent months. However, while this dominance previously raised no questions, it is now becoming less clear-cut, as the news background has changed significantly. The bears' advantage is now nearly threefold.
I still do not believe in a bearish trend for the pound. However, in the near term, everything will depend not on economic indicators, Trump's trade policy, or central bank monetary policy, but on the duration, scale, and consequences of the war in the Middle East. In recent weeks, the market had begun to price in peace, but negotiations between Iran and the United States could be lengthy and difficult.
Economic Calendar for the United Kingdom and the United States:
United Kingdom – Manufacturing PMI (08:30 UTC).United Kingdom – Services PMI (08:30 UTC).United States – Manufacturing PMI (13:45 UTC).United States – Services PMI (13:45 UTC).The economic calendar for June 23 contains four events, with the UK PMI data being the most noteworthy. Therefore, economic data are likely to influence market sentiment on Tuesday.
GBP/USD Forecast and Trading Recommendations:
Short positions were possible after a rebound from the 1.3268–1.3277 level on the hourly chart, targeting the 1.3158–1.3177 level. Long positions were possible after a rebound from the 1.3158–1.3177 level, targeting 1.3277. This target was nearly reached. New long positions may be considered after a close above the 1.3268–1.3277 level, targeting the 1.3349–1.3355 level.
Fibonacci grids are plotted from 1.3158 to 1.3655 on the hourly chart and from 1.3158 to 1.3655 on the 4-hour chart.