The GBP/USD pair continues its upward movement and has every chance this week to invalidate Bearish Imbalance 20 and form a new bullish imbalance. Undoubtedly, current geopolitical developments are supporting bullish traders. However, it should be noted that the pound's advance remains highly unconvincing and could even result in the formation of a trading range. In fact, the pound has been trading within a horizontal channel between 1.3305 and 1.3505 for several weeks. The upward movement remains weak, the bearish pattern failed to materialize, and no bullish patterns have emerged so far.
If an agreement between Iran and the United States is signed by the end of the week, it will become much easier for bulls to continue their advance. If not, no meaningful bullish momentum is likely to develop. Under the current circumstances, traders can only wait for new patterns to form, as there is little to work with at the moment. It is also important to closely monitor geopolitical news if new patterns do emerge, as geopolitical developments can invalidate any technical setup almost instantly. We witnessed exactly this last week. Bears were preparing for a new decline from Bearish Imbalance 20, but Donald Trump announced the possibility of a peace agreement with Iran instead of the previously expected military strikes. As a result, bearish traders immediately retreated despite the presence of Bearish Imbalance 20.
The Federal Reserve meeting will take place on Wednesday evening, followed by the Bank of England meeting on Thursday. I do not expect either central bank to signal future rate hikes or make any major policy decisions in June. Therefore, trader sentiment is unlikely to change significantly as a result of these events. However, market activity remains subdued, and traders clearly need a catalyst to generate a new directional move.
The situation in the Middle East has started to improve. The U.S. dollar generally performs better during periods of geopolitical tension than either the euro or the pound. Therefore, if the conflict in the Middle East moves toward resolution, both the euro and the pound are likely to receive additional support. At present, however, the market remains highly cautious regarding reports of a potential agreement. For example, Israel indicated on Monday that its interests had not been adequately taken into account, which could potentially trigger renewed tensions in the region. In that case, the efforts of both the United States and Iran could prove ineffective.
In my view, the broader trend remains bullish despite the pair's significant declines earlier this year. At present, the ceasefire in the Middle East remains in place and may be extended. The Strait of Hormuz remains subject to restrictions, while the nuclear issue has not been resolved. The situation continues to fluctuate between improvement and deterioration. As a result, market participants are uncertain about which developments to trust and remain reluctant to take additional risks.
The technical picture is currently as follows. All available and valid patterns have either been completed, invalidated, or are likely to be invalidated soon. I continue to expect a new bullish surge, which would require the signing of an agreement between Iran and the United States. Therefore, traders should wait for a positive resolution of the Middle East situation and the formation of new patterns.
The economic news backdrop on Tuesday was effectively absent. In the United States, reports on housing starts and building permits were released, but these figures failed to attract traders' attention. This outcome was largely expected. Wednesday, Thursday, and Friday will be far more important in terms of news flow, and the key market moves of the week will likely occur during those sessions.
The broader fundamental backdrop remains such that, over the long term, I can only anticipate further weakness in the U.S. dollar. Even the conflict involving Iran and the United States changes little in this regard. Geopolitical tensions temporarily reminded markets of the dollar's safe-haven status for roughly two months, but the overall outlook for the U.S. currency remains less favorable. If the U.S. economy gains momentum in 2026, the Federal Reserve resumes its monetary tightening cycle, and tensions between the United States and Iran evolve into a prolonged conflict, then the dollar could realistically target the 1.3100–1.3000 level. However, in my opinion, the long-term outlook for the U.S. currency could not have changed solely because of one strong Nonfarm Payrolls report, and the Federal Reserve has not yet signaled any readiness to tighten monetary policy further.
News Calendar for the United States and the United Kingdom:
- United Kingdom – Consumer Price Index (06:00 UTC).
- United States – Retail Sales (12:30 UTC).
- United States – FOMC Interest Rate Decision (18:00 UTC).
- United States – Dot Plot Projections (18:00 UTC).
- United States – Federal Reserve Press Conference (18:30 UTC).
The economic calendar for June 17 contains five events, four of which are considered important. The economic backdrop will begin influencing market sentiment from the start of Wednesday's trading session.
GBP/USD Forecast and Trading Recommendations:
The long-term outlook for the pound remains bullish, while all bearish patterns have either been invalidated or are no longer relevant. Therefore, traders should expect the formation of new patterns in the near future, which will provide guidance regarding the likely direction of the next move. However, it should also be noted that geopolitical developments can push the pound in either direction, and the Middle East conflict has not yet been fully resolved, making it premature to open long positions without clear trading signals. If an agreement is signed, the pound has every chance of advancing toward at least the 1.3655 level.
