On the hourly chart, the GBP/USD pair on Tuesday rebounded from the support level of 1.3513–1.3539, reversed in favor of the pound, and rose toward the 61.8% corrective level at 1.3596. A rebound of quotes from this level or from the resistance level of 1.3611–1.3620 will again favor the US dollar and a resumption of the decline. A close above the 1.3611–1.3620 level will increase the probability of continued growth toward the next Fibonacci level of 76.4% at 1.3700.
The wave situation remains "bullish." The last completed upward wave broke the previous peak, while the new downward wave did not break the previous low. Geopolitics gave the bears almost complete market control for two months, after which the geopolitical background supported the bulls for three weeks. Currently, the situation in the Middle East is contradictory but is shifting toward escalation of the conflict and a prolonged confrontation between Iran and the United States. It will be difficult for the bulls to launch strong advances in the coming weeks.
The news background on Tuesday was rather uneventful. US economic reports showed values that almost fully matched market expectations, while geopolitical news flow was limited to new Iranian attacks on the UAE. There were no other significant developments during the day. The pound continues to be pulled in two directions. On one hand, the Bank of England took a fairly "hawkish" stance last week, allowing bulls to continue their advance. On the other hand, geopolitics is deteriorating—and that is a fact. In the context of a worsening situation in the Middle East, bears may take the initiative. Perhaps the market does not yet believe in a full-scale escalation of hostilities, but a ceasefire and calm remain things of the past for now. Negotiations between Iran and the United States continue, with both sides slowly moving toward each other while not forgetting mutual strikes in the Persian Gulf region. It will be difficult for the pound to continue rising amid such an unstable information flow. No important events are expected today or Thursday. Market attention has shifted to Friday, when the Nonfarm Payrolls report and the US unemployment rate will be released. These data may indicate whether at least one easing of the Federal Reserve's monetary policy should be expected in 2026.
On the 4-hour chart, the pair has consolidated above a downward trend channel, suggesting the possibility of a full-fledged bullish trend. A consolidation above the Fibonacci level of 38.2% at 1.3540 allows for expectations of continued growth toward the 23.6% corrective level at 1.3664, but the hourly chart currently provides a clearer picture. I recommend focusing more closely on the hourly chart. No emerging divergences are observed today.
Commitments of Traders (COT) report:
The sentiment of the "Non-commercial" trader category became more bearish over the last reporting week. The number of long contracts held by speculators decreased by 3,509, while short positions increased by 5,091. The gap between long and short positions is now roughly 59 thousand versus 120 thousand. For six consecutive weeks, non-commercial traders have been actively increasing short positions and reducing longs, leading to a significant imbalance. In recent months, bears have dominated, which raises no questions given the geopolitical context.
I still do not believe in a sustained bearish trend for the pound, but now everything depends not on economic indicators, Trump's trade policy, or central banks' monetary policy, but on the duration, scale, and consequences of the war in the Middle East. In recent weeks, the market had shifted toward expectations of de-escalation, but recent news suggests that a full ceasefire is still far away, and the conflict could resume at any moment. In that case, the bears' advantage could strengthen further.
Economic calendar for the US and the UK:
- US – Change in ADP employment (12:15 UTC).
On May 6, the economic calendar contains only one entry that cannot be considered a major US labor market indicator. The impact of the news background on market sentiment on Wednesday may be very weak.
GBP/USD forecast and trading advice:
Selling the pair is possible today if there is a rebound on the hourly chart from the 1.3596–1.3620 level, with a target of 1.3526–1.3539. Buying opportunities were available on a rebound from the 1.3513–1.3539 level with a target of 1.3596–1.3620. The target has been reached. New buying positions can be considered if the price closes above the 1.3611–1.3620 level, with a target of 1.3700.
Fibonacci levels are built from 1.3866–1.3158 on the hourly chart and from 1.3012–1.3868 on the 4-hour chart.
