On the hourly chart, GBP/USD first declined on Thursday and then returned to the resistance level of 1.3454–1.3466. Today, a rebound from this zone would favor the U.S. dollar and support a decline toward the 1.3408 level and the support level of 1.3349–1.3355. Consolidation above the 1.3454–1.3466 level would allow traders to expect a continuation of the upward move toward the next resistance level at 1.3526–1.3539.

The wave structure remains bearish, as bulls still lack sufficiently positive geopolitical developments to launch a full-scale advance. The latest completed downward wave broke the previous low, while the latest upward wave failed to break the previous high. Geopolitical factors have recently supported the bulls; however, the prospects for a deal between Iran and the United States are fading once again, while hostilities in the region have resumed.

I have already analyzed the news background that initially led to a decline and then to a recovery on Thursday in the EUR/USD article. It only remains to add the U.S. reports released during the second half of the day. In my view, the market largely ignored them, as the dollar began to decline before their publication, and market sentiment did not change afterward. Therefore, I believe that the main reason for the U.S. dollar's weakness during the second half of the day was the information reported by Axios.

US economic data were not entirely disappointing. Only the first-quarter GDP report once again fell short of expectations. Traders had expected U.S. economic growth of 2.0%, but the figure came in at just 1.6%. On the other hand, the report on durable goods orders exceeded expectations, rising by 7.9% compared with forecasts of 3.5%. The Core PCE Index was also broadly in line with expectations. Therefore, the durable goods report could have encouraged bears to take the offensive, but the GDP data prevented that. At the same time, the GDP report alone could have justified further dollar weakness, but the dollar was already under pressure due to the optimistic information from Axios. The market continues to focus primarily on geopolitical developments, while all other factors remain secondary.

On the 4-hour chart, GBP/USD rebounded from the resistance level of 1.3482–1.3514, reversed in favor of the U.S. dollar, and began moving lower toward the 23.6% Fibonacci retracement level at 1.3327. However, price movements in the near term will depend on geopolitical developments rather than technical analysis. Technical analysis can currently be used only as a supplementary tool. No emerging divergences are observed in any indicator today.

Commitments of Traders (COT) Report:

Sentiment among the Non-commercial category became more bearish again during the latest reporting week. The number of Long positions held by speculators decreased by 11,530, while the number of Short positions increased by 9,718. The gap between Long and Short positions now stands at approximately 68,000 versus 132,000.

Bears have dominated the market in recent months, which comes as no surprise given the geopolitical situation in the Middle East and the political crisis in the United Kingdom. The bears' advantage is currently more than twofold.

I still do not believe in a long-term bearish trend for the British pound, but in the near future everything will depend not on economic indicators, Trump's trade policy, or central bank monetary policy, but rather on the duration, scale, and consequences of the conflict in the Middle East. In recent weeks, the market has adjusted to expectations of a prolonged conflict, but the latest news suggests that a ceasefire may still be achieved, although the process is unlikely to be easy or quick.

News Calendar for the United States and the United Kingdom:

• United Kingdom – Speech by Bank of England Governor Andrew Bailey (08:20 UTC).

The economic calendar for May 29 contains only one event that can be considered important. However, the market reaction will depend on the remarks made by the Bank of England Governor. The economic backdrop may therefore influence market sentiment on Friday.

GBP/USD Forecast and Trading Recommendations:

Short positions may be considered today if the pair rebounds from the 1.3454–1.3466 level on the hourly chart, with targets at 1.3408 and 1.3349–1.3355. Long positions were valid following a close above 1.3408, targeting the 1.3454–1.3466 level. New long positions may be considered after a close above 1.3454–1.3466, with a target at 1.3526–1.3539.

Fibonacci retracement levels are drawn from 1.3158 to 1.3655 on the hourly chart and from 1.3866 to 1.3158 on the 4-hour chart.