FX.co ★ Der | GBP/USD

The GBP/USD pair has slowed considerably, but the overall uptrend cannot be entirely ruled out, as the pound's technical support is heavily reliant on the euro's primary advantage. Currently, the euro maintains a relatively stable upward bias, continuing to support its potential major bullish imbalances rather than negating them, thus forming a structural safety net that could protect both European currencies from sustained downward pressure. This week, market observers encountered some seemingly contradictory price action, as the usual logical correlations were reversed. The dollar strengthened in the first half of the week without fundamental factors, then fell sharply on Thursday, driven by positive factors. Notably, after the unexpectedly strong August non-farm payrolls data, which should have supported a 100-point rise in the dollar, the dollar ultimately declined only marginally by 10 to 20 points. This erratic volatility defies fundamental logic, making the pound's movements particularly unpredictable and forcing technical analysts to rely more heavily on the more obvious and informative price patterns on the EUR/USD chart. Despite strong labor market data in August, the overall economic reality still suggests that the overall employment trend remains largely unchanged, and several Federal Reserve officials have publicly expressed their opposition to an immediate tightening of monetary policy. Therefore, the market widely expects the Fed to leave interest rates unchanged at its September meeting. Should the euro manage to break out of the double imbalance zone and trigger a new rally, the pound is expected to follow suit naturally, without an immediate independent bullish reversal pattern emerging, even though it is currently below two active bearish imbalance zones. Over the past month, the dollar has suffered a series of macroeconomic setbacks, including the US Treasury’s strategic expansion of its long-term bond-buying program, weak monthly and annual employment data, slowing consumer price inflation, declining GDP growth, and a continued weakening of market expectations for a hawkish stance from the Federal Reserve. While the latest non-farm payrolls and services PMI (ISM) data provided a temporary boost to the dollar, the buying momentum ultimately fizzled out at a crucial moment when victory seemed assured.

Currently, dollar bears have virtually no sustainable long-term outlook, as broader fundamentals consistently fail to sustain dollar strength. From a macroeconomic perspective, the US dollar market has been trading within a multi-wave sideways range for nearly a year, and historical experience suggests this ultimately signals the continuation of the third wave of the uptrend. However, traders should be wary of other structural outcomes, such as the possibility of liquidity exceeding the levels seen on May 1st, which could inadvertently trigger a sharp correction entirely detached from macroeconomic factors. Meanwhile, geopolitics has largely lost its ability to stimulate demand for the dollar as a safe haven. Diplomatic negotiations between Washington and Tehran have effectively collapsed, and repeated retaliatory strikes and political rhetoric from both sides have had little impact on reaching a lasting resolution to the conflict. Since these recurring geopolitical conflicts cannot generate sustained market momentum, the dollar can no longer rely on safe-haven flows every time a conflict erupts, as it once did. Ultimately, technical indicators point to the fragility of the current market environment, and market sentiment could quickly shift from optimistic to pessimistic as a result of some ambiguous news event. The near-term fate of the pound is closely tied to the euro's ability to maintain its key imbalance zone. Despite seemingly positive fundamental data on Friday—weaker-than-expected European retail sales and strong US labor market data—the market consistently resisted aggressive dollar buying, suggesting that investors are not yet ready to price in expectations of monetary policy tightening by the Federal Open Market Committee. This persistent skepticism suggests that any intermittent strength of the dollar is entirely random and temporary. While geopolitical tensions in the Middle East may occasionally force markets to reassess the dollar's status as a safe haven, the underlying structural environment and the overall policy outlook for 2026 still point to a weak dollar, and it is likely that the dollar will weaken again once the current period of consolidation ends.