On the hourly chart, the GBP/USD pair rebounded from the 1.3526–1.3543 resistance level on Thursday, reversed in favor of the US dollar, and declined toward the 1.3454–1.3457 support level. A rebound from this zone today would favor the British pound and signal a resumption of growth toward the 1.3526–1.3543 and 1.3632–1.3641 resistance levels. Consolidation below the 1.3454–1.3457 level would allow traders to expect a renewed decline toward the 76.4% Fibonacci level at 1.3382.
The wave structure remains bullish. The latest completed downward wave did not break the previous low, while the new upward wave exceeded the previous high. Therefore, the bulls continue to dominate. In my view, the bearish impulse that began in 2026 is complete, and only geopolitical developments could prevent the bulls from extending their advance. However, at this stage, geopolitical factors are likely to trigger only a corrective pullback.
Thursday's news background offered little support for the British pound. Nevertheless, traders had already positioned themselves for a corrective pullback, while the technical picture pointed to further downside. Earlier in the day, the UK released GDP and industrial production data, which, in my opinion, became one of the key drivers behind the pound's decline.
The UK economy expanded by just 0.1% month-on-month and 0.7% year-on-year in May, broadly matching market expectations. While the GDP report cannot be described as weak or disappointing, the industrial production figures certainly can. Industrial output fell by 0.5% month-on-month in May, compared with market expectations of a 0.1% decline. Thus, the economic data confirmed that the pound was ready for a corrective pullback, which ultimately materialized.
There will be only a limited number of economic releases today, so the bulls are unlikely to launch another strong advance at the end of the trading week. Geopolitical developments may also support the US dollar, as tensions in the Middle East continue to escalate and Donald Trump has threatened new strikes against Iran. Personally, I have little doubt that such strikes would provoke a response.
On the 4-hour chart, the GBP/USD pair rebounded from the 23.6% Fibonacci retracement level at 1.3538, reversed in favor of the US dollar, and declined toward the 1.3467–1.3482 support level. A rebound from this area today would support renewed growth toward 1.3538, while consolidation below it would signal a further decline toward the 50.0% Fibonacci level at 1.3409. No emerging divergences are currently observed.
Sentiment among the Non-commercial group became less bearish during the latest reporting week, although it remains bearish overall. The number of long positions held by speculative traders increased by 7,415, while short positions declined by 6,829. The current balance stands at approximately 45,000 long positions versus 132,000 short positions.
Bears have dominated the market for several months. However, while this dominance previously raised a few questions, it has become less convincing as the fundamental backdrop has changed significantly. Even so, bearish positions still outnumber bullish ones by nearly three to one.
I still do not believe in the continuation of a long-term bearish trend for the pound. In the near term, however, market direction will depend less on economic indicators, Trump's trade policy, or central bank monetary policy, and more on the duration, scale, and consequences of the conflict in the Middle East. In recent weeks, the market has become more optimistic about the prospects for peace, but negotiations between Iran and the United States may prove lengthy and difficult. Moreover, there is no guarantee that they will end with the signing of a nuclear agreement.
United States
The economic calendar for July 17 contains four releases, none of which I consider particularly important. Therefore, the impact of macroeconomic data on market sentiment is likely to remain limited and confined mainly to the second half of the day.
Short positions were justified after a rebound from the 1.3526–1.3543 resistance level on the hourly chart, targeting the 1.3454–1.3457 support zone. This target has been reached. New short positions may be considered following a confirmed close below the 1.3454–1.3457 support level, with a target at 1.3382. Long positions may be considered after a rebound from the 1.3454–1.3457 support level, targeting the 1.3526–1.3543 resistance level.
Fibonacci retracement levels are drawn from 1.3457 to 1.3139 on the hourly chart and from 1.3158 to 1.3655 on the 4-hour chart.
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