The GBP/USD pair continues a mild decline within a corrective pullback that began after liquidity was taken from the February 26 swing and the imbalance 16 was filled. I do not expect a strong drop in GBP/USD unless the Middle East conflict resumes this week. In that case, bears could go back on the offensive, and chart patterns would not save the pound from falling. At the moment, the situation in the Middle East remains complex and tense, but it is not worsening. The Strait of Hormuz has effectively not been reopened, negotiations between the U.S. and Iran have been at a deadlock from the start, and the ceasefire is still in place. Washington's main demand—that Tehran abandon nuclear weapons—has been rejected, and Iran is not ready for new negotiations. As the saying goes, "things are still where they started." The situation has not improved, but it has not deteriorated either. The market continues to wait for a resolution: either the war resumes or the parties manage to settle the conflict. A reaction to imbalance 19 (bullish) could push bulls into new attacks. Therefore, in the coming days, it is important to watch for the formation of a new bullish signal. If this pattern is invalidated, the pound's decline will likely continue toward imbalance 18.

The latest rally in the pound began from a "Three Drives Pattern." Thus, traders received a bullish signal at the very start of the move, and the trend remains bullish. At present, the truce is fragile, and the parties have not yet decided whether to continue negotiations or return to conflict. Talks may resume this week—but so could hostilities. The Strait of Hormuz remains under a dual blockade, and Tehran and Washington cannot agree on the next round of negotiations. As of Wednesday, the situation remains unchanged. Both sides express willingness to sign an agreement, but in practice no real steps are being taken.

The "Three Drives Pattern," marked on the chart with a triangle, allowed bulls to take control. A second reaction occurred at imbalance 16, though second reactions are usually weaker than the first. The pair also swept liquidity from the February 26 high, and together these factors triggered the current corrective pullback, which may end at imbalance 19. Thus, in the near term, either a new bullish signal will form, or the bullish pattern will be invalidated, allowing bears to regain control.

The economic news flow on Wednesday was again quite eventful. In the UK, the March inflation report was released, but its figures disappointed many traders. I believe the market expected inflation in the UK to rise in line with the Eurozone or the U.S. In reality, the consumer price index increased by only a few tenths of a percentage point, while core CPI slowed to 3.1% year-on-year. The tightening of Bank of England monetary policy is being postponed, but the market did not react strongly to this factor.

In the U.S., the overall backdrop still suggests that, in the long term, little can be expected other than a weaker dollar. Even the conflict between Iran and the U.S. does not change this significantly. Geopolitics briefly revived the dollar's safe-haven appeal for about two months, but structurally the outlook for the U.S. currency remains challenging. The U.S. labor market continues to weaken, the economy is approaching recession, and the Federal Reserve—unlike the ECB and the Bank of England—is not planning monetary tightening in 2026. There have also been several large protests across the U.S. against Donald Trump. From an economic standpoint, I see no strong basis for sustained dollar growth.

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

• UK — Manufacturing PMI (08:30 UTC)
• UK — Services PMI (08:30 UTC)
• U.S. — Initial Jobless Claims (12:30 UTC)
• U.S. — Manufacturing PMI (13:45 UTC)
• U.S. — Services PMI (13:45 UTC)

On April 23, the economic calendar contains five entries, which may again be largely ignored, as has been the case with most data this week. The impact of the news flow on market sentiment on Thursday may remain very weak.

GBP/USD forecast and trading advice:

For the pound, the long-term outlook remains bullish. The "Three Drives Pattern" warned traders about potential growth, followed by the formation of a bullish imbalance and a bullish signal. The price swept liquidity from bullish swings on March 10 and March 23, as well as from the February 26 swing, yet bears did not take control in either case. This is another positive factor for the pound—traders remain in a bullish mindset. Therefore, despite geopolitical risks, I believe the upward trend will continue under current conditions. 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 could provide traders with a new buying signal.