Yesterday, the GBP/USD pair reacted to the bearish imbalance 17 (which allowed traders to reopen short positions), but the bearish move was short-lived. UK news—which in recent months has provided little support to the pound when it was actually needed—ended up offering some support. As a result, we saw a sharp rise in the pound, which invalidated imbalance 17, followed the next day by an equally strong decline and a second reaction to a smaller, unnamed imbalance. This week's price movements have been very challenging for traders, but it should be understood that three major events significantly influenced market sentiment. On Wednesday, GBP/USD declined as expected, while on Thursday it rose as expected. Unfortunately, on Friday, when there was no news backdrop, we saw an unexplained drop in the pound, which keeps bearish prospects intact.

There was no open escalation of the Middle East conflict this week, but the overall situation has not improved. Iran continues to block the Strait of Hormuz, Gulf states continue to exchange missile and drone strikes, EU countries are urgently trying to address the looming energy crisis on their own, and central banks are preparing for rising inflation. As a result, neither bulls nor bears received clear support. Geopolitics continues to favor the bears, while bulls are supported by the fact that geopolitical influence cannot last indefinitely.

At the moment, there are no bullish patterns, but this week has already produced two sell signals at imbalance 17. The probability of further declines in both pairs remains fairly high, and any discussion about a potential bullish recovery is still speculative and lacks confirmation. At the same time, in my view, the current rise in the U.S. dollar is fragile.

The bullish trend for the pound remains intact. As long as it holds (above the 1.3012 level), more attention should be paid to bullish signals. However, there are currently no such signals, while geopolitics continues to weigh heavily on both the euro and the pound.

Friday's news background did not support either bulls or bears, but it should be understood that any strengthening of the U.S. dollar may be linked to developments in the Middle East. Almost daily, new strikes target oil and gas facilities in the region, further worsening the global energy situation.

In the United States, the overall news background remains such that, in the long term, the dollar is more likely to weaken. The conflict between Iran and the U.S. has not significantly changed this outlook. The situation for the U.S. dollar remains challenging in the long term but highly favorable in the short term. U.S. labor market data continues to disappoint more often than it exceeds expectations. Military actions under Trump, threats toward Denmark, Mexico, Cuba, Colombia, EU countries, Canada, and South Korea, a criminal case involving Jerome Powell, government shutdowns, the Epstein-related scandal involving U.S. elites, a possible impeachment of Trump by the end of the year, and likely Republican election losses all contribute to the broader picture of political and structural instability in the United States. In my view, bulls have all the necessary conditions to resume a broader advance in 2026, but for now traders are fully focused on geopolitics and the energy crisis.

For a sustained bearish trend, the U.S. dollar would need a strong and stable positive news background, which is difficult to expect under Donald Trump and unlikely to be provided by geopolitics alone. However, uncertainty remains high. If a larger global conflict were to emerge and spread beyond the Middle East into Eurasia, the dollar could strengthen significantly and for a prolonged period. Still, there is hope that such a scenario will not materialize. In that case, the dollar's upside potential would remain limited by the negative nature of events in the Middle East.

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

On March 23, the economic calendar contains no significant entries. The news background is not expected to influence market sentiment on Monday.

GBP/USD Forecast and Trading Advice:

The long-term outlook for the pound remains bullish. However, there are currently no active bullish patterns—only a sell signal from imbalance 17, which may support bears in the short term. It is worth emphasizing again the fragility of the dollar's recent strength. The sharp decline in the pair over recent weeks resulted from a series of unfavorable circumstances. Without escalating tensions involving Iran and military actions in the Persian Gulf, such a strong rise in the dollar would likely not have occurred. This decline could end just as unexpectedly as it began. However, for now, bearish momentum remains. Although imbalance 17 has been invalidated, the price reacted again to a smaller imbalance, meaning the pair may continue to decline toward the 1.3000–1.3100 level.