GBP/USD: Smart Money – Bulls Remain Calm and Confident

The xm外汇隐私保护GBP/USD pair continues its mild corrective decline, which began after the formation of two bearish signals at once: a liquidity grab (marked by the red line) and a reaction to imbalance 16. Thus, traders were warned in advance about the impending decline. At present, the pair is trading within imbalance 19 and even slightly below it. However, the imbalance pattern consists of three candles and is considered invalid only if the price moves beyond the base of the very first candle. That point is still far away. Therefore, a bullish signal could still form in the very near future.

What is needed for the pound to resume its growth? First, negotiations in Islamabad must take place. Second, there must be at least some progress. Third, the market must believe in a resolution of the Middle East situation. These three factors could support bulls in the near term. We can see that economic reports are currently being ignored by the market, so the focus remains on geopolitics. It was reported today that Iran's foreign minister has arrived in Islamabad. However, no details are available, so such news should be treated with caution. It may turn out that the visit is for unrelated matters, that the U.S. delegation did not arrive, or even that the report is inaccurate.

The latest rise in the pound began with a "Three Drives Pattern." Thus, traders received a bullish signal at the very beginning of the move, and the trend remains bullish. At present, the ceasefire is quite fragile, and the parties to the conflict have not yet decided whether to continue negotiations or resume fighting. Talks may restart this week, but the conflict could also reignite. The Strait of Hormuz remains under dual blockade, while Tehran and Washington have been unable to agree on the next round of negotiations. In fact, as of Friday, nothing has changed for about a week. Both sides verbally express a willingness to reach a deal, but no real steps have been taken.

The "Three Drives Pattern," marked on the chart by a triangle, allowed bulls to launch their advance. A second reaction occurred at imbalance 16, but second reactions are typically weaker than the first. The pair also performed a liquidity grab above the February 26 high, and together these factors triggered a corrective pullback, which may end at imbalance 19. Therefore, a new bullish signal may form soon, or the bullish setup could be invalidated, opening the way for bearish pressure.

Friday's economic news flow once again provided opportunities for active trading. It became known that UK retail sales in March increased more than expected, marking at least the fourth positive report from the UK this week. Given that the pound declined for most of the week, it reinforces the view that economic data is being ignored by the market.

In the United States, the overall backdrop still suggests that, in the long term, little supports dollar strength. Even the conflict between the U.S. and Iran does not fundamentally change this. Geopolitics temporarily reminded markets of the dollar's safe-haven status for about two months, but structurally, the outlook remains challenging. The U.S. labor market continues to weaken, the economy is approaching recession, and—unlike the ECB and the Bank of England—the Federal Reserve is not expected to tighten monetary policy in 2026. Additionally, there have been several large-scale protests across the U.S. against Donald Trump. From an economic perspective, there are no clear reasons for sustained dollar growth.

Economic Calendar for the U.S. and the UK:

On April 27, the economic calendar contains no significant events. The news background is unlikely to influence market sentiment on Monday.

GBP/USD Forecast and Trading Tips:

The long-term outlook for the pound remains bullish. The "Three Drives Pattern" signaled potential growth, followed by the formation of a bullish imbalance and a bullish signal. The price performed liquidity grabs from bullish swings on March 10 and March 23, as well as from the February 26 swing, yet bears did not launch a decisive attack in either case. This is another positive sign for the pound—market sentiment remains bullish.

Therefore, under current conditions, despite geopolitical risks, the upward movement is likely to continue. Most likely, the euro will also continue to rise. The target for the pound is the 2026 high. The reaction to imbalance 16 triggered a corrective pullback, but a reaction to imbalance 19 may provide traders with a new buy signal.

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