On the hourly chart, the GBP/USD pair confirmed a second consolidation below the 1.3454–1.3457 level on Monday. However, today the bears' attack was halted by fairly positive UK economic data, which will be discussed in more detail below. A rebound from the 1.3454–1.3457 level would favor the U.S. dollar and a resumption of the decline toward the 76.4% Fibonacci retracement level at 1.3382. Consolidation above the 1.3454–1.3457 level would increase the likelihood of renewed growth toward the 1.3526–1.3543 resistance level.

The wave structure remains bullish. The last completed upward wave broke above the previous peak, while the new downward wave failed to break below the previous low. Therefore, the bulls continue to maintain the initiative. In my view, the bearish impulse that began in 2026 has already ended, and only geopolitical developments could prevent the bulls from extending their advance. However, at this stage, geopolitics is likely to trigger only a corrective pullback.

There was no significant news background on Monday, but today several UK economic reports were released, providing support for bullish traders. That support is unlikely to be long-lasting, as the UK will publish its June inflation report tomorrow, which carries greater significance than unemployment or wage data. Nevertheless, the May unemployment rate remained unchanged at 4.9% (although the market had expected an increase to 5.0%), the number of unemployment claims increased by 6.7K compared with the forecast of +29.4K, while wage growth slowed to 4.3%. Overall, I consider this set of reports to be positive. As a result, the pound has an opportunity to resume its bullish trend. However, as I have already noted, traders will focus tomorrow on the more important inflation report, which is likely to influence the Bank of England's policy stance. Inflation is expected to slow to 2.6% in June, reducing the likelihood of further monetary policy tightening in the near term. Therefore, the pound may strengthen today but decline tomorrow.

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 U.S. dollar, and consolidated below the 1.3467–1.3482 level. Therefore, the decline may continue toward the 50.0% Fibonacci retracement level at 1.3409 and lower. Consolidation above the 1.3467–1.3482 level would open the way for renewed growth in the pound. No emerging divergences are currently observed.

Commitments of Traders (COT) Report:

Sentiment among the Non-commercial group became less bearish over the latest reporting week, although it remains bearish overall. The number of Long positions held by speculative traders increased by 6,521, while the number of Short positions declined by 10,129. The gap between Long and Short positions now stands at approximately 51,000 versus 122,000. Bears have dominated the market in recent months. However, while this dominance previously raised little doubt, the changing fundamental backdrop has begun to call it into question.

I still do not believe in a sustained 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 than on the duration, scale, and consequences of the conflict in the Middle East. In recent weeks, the market has shifted toward expectations of peace, but negotiations between Iran and the United States collapsed before they had meaningfully begun. There is also no guarantee that they will resume in the near future.

U.S. and UK Economic Calendar:

• United Kingdom – Unemployment Rate (06:00 UTC).
• United Kingdom – Average Earnings Index (06:00 UTC).
• United Kingdom – Claimant Count Change (06:00 UTC).

The economic calendar for July 21 contained three events, all of which have already been released. Therefore, the economic backdrop will continue to influence market sentiment on Tuesday.

GBP/USD Forecast and Trading Tips:

Short positions were possible after a rebound from the 1.3526–1.3543 resistance level on the hourly chart, with a target of 1.3454–1.3457. The target has been reached. New short positions may be considered following consolidation below the 1.3454–1.3457 level or after a rebound from this zone from below, with a target of 1.3382. Long positions may be considered after consolidation above the 1.3454–1.3457 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.