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27.08.2026 06:17 PM
The GBP/USD pair finally showed a corrective decline on Wednesday and Thursday, which I had been strongly expecting. Thus, the pound is currently in the last "bullish" imbalance 27 after taking liquidity from the latest swing. If this pattern triggers a reaction, another fourth buy signal will be formed. If this pattern is invalidated, the bears could begin targeting a more significant move than 100 points. Notably, Kevin Warsh is scheduled to speak tomorrow, and the annual revision of the Nonfarm Payrolls report will also be released. In other words, in my view, the chances of a dollar decline are quite high. In any case, either imbalance 27 will be invalidated or it will generate a new signal.
Let me remind you that in recent weeks the dollar has suffered numerous setbacks, including the U.S. Treasury's decision to increase the volume of long-term bond buybacks, a weak Nonfarm Payrolls report, a slowdown in the Consumer Price Index, slower GDP growth, and a decline in market expectations for tighter Fed monetary policy. Therefore, if the dollar's decline continues from current levels, it would not be surprising.
Do the bears have any prospects at the moment? In my view, no. A buy signal was formed last week, giving traders an opportunity to open new long positions, which are already showing profits of around 100 points. Since June 24, the pound has formed three buy signals and has also provided an early warning of an impending markup phase (liquidity grabs). The bears currently have no patterns or signals at all. At this point, the bears can only rely on the invalidation of imbalance 27, which would allow them to continue their attacks. However, for this to happen, Friday's news flow would need to support the dollar rather than the opposite.
As I have already mentioned, geopolitics is no longer having a favorable effect on the dollar, as negotiations between the United States and Iran have become completely deadlocked. Officially, Tehran is negotiating only with Oman. It remains unclear what these negotiations will lead to in terms of ending the conflict and reopening the Strait of Hormuz. Iran may be able to agree on the terms for control of the Strait of Hormuz with Oman, but how would that resolve the conflict with the United States and lift the U.S. blockade of the strait? Meanwhile, Donald Trump has decided to impose a second blockade on Iran—a financial one. At the same time, he plans to impose sanctions on all countries supporting Iran. A new global conflict is emerging, which at best will take the form of a trade or sanctions conflict.
This week, oil fell to around $90 per barrel, but in my view, it will return above $100 in the near future. Information emerged that Donald Trump could lift the economic blockade of Iran if Tehran agrees to lift the blockade of the Strait of Hormuz, which prompted oil prices to move lower. However, for now I regard this information as nothing more than a media rumor.
The chart analysis indicates a new bullish advance. Traders currently have three "bullish" imbalances (25, 26, and 27) within which long positions can be considered. Naturally, the main focus should be on the latest imbalance 27, which is also the closest to the current price. The liquidity grab above the May 1 peak triggered a corrective pullback, and this pullback could extend even below imbalance 27. However, an imbalance is not only an area of interest but also a support zone for the price.
There was virtually no significant economic news flow, apart from the U.S. initial jobless claims report, to which traders did not react at all. Thus, we saw the necessary decline in the pair toward the nearest imbalance, and tomorrow the further direction of GBP/USD will be determined.
The overall news flow remains such that, in the long term, I can expect nothing other than a decline in the dollar. The war between Iran and the United States has not changed this either. Geopolitical developments prompted the market to remember the dollar's safe-haven status for several months, but the conflict has already passed its active phase. The chances of tighter FOMC monetary policy have declined significantly in recent weeks, putting pressure on the U.S. currency. Therefore, in my view, any dollar strength is temporary and driven by short-term factors. I see no reason for a new bearish advance.
The August 28 economic calendar contains two events, both of which I would consider important. The economic news flow will influence market sentiment in the second half of the day on Friday.
The long-term outlook for the pound remains "bullish." After liquidity grabs from the two latest swings and the formation of a series of buy signals, the bulls continue to advance. I currently see no basis for bearish attacks, as there are no "bearish" patterns or signals. The bulls received a buy signal from imbalance 24, which remains valid. Traders can already consider taking profit on this signal. Another buy signal was formed within imbalance 26. The current target for the pound is the January 27 peak at 1.3867. The liquidity grab from the May 1 swing pushed the pound slightly lower but did not disrupt the bullish advance. The next step should be the formation of a "bullish" signal within imbalance 27.
