The GBP/USD pair made another reversal in favor of the pound and resumed its upward movement fully in line with the current chart structure. Last week, the price reacted to bullish imbalance 19, after which bullish imbalance 20 was formed, and this week the pound also reacted to that pattern. Without positive geopolitical developments that reduced the attractiveness of the U.S. dollar in the eyes of traders, we likely would not have seen another upward move. Nevertheless, traders had a clear and obvious area of interest, as well as a well-defined pattern where a new buy signal should have been expected. As we can see, the signal was indeed formed.

Only geopolitics can now interfere with the bulls' advance. In my view, geopolitical developments could reverse at any moment, so all news related to negotiations between Iran and the United States should be monitored closely. Yesterday, Iran and the U.S. exchanged new missile strikes, putting both the ceasefire and future negotiations at risk. Today, the Nonfarm Payrolls report came in twice as strong as forecasts. Thus, the bears now have reasons to launch their own attacks — although they do not always take advantage of them.

The situation surrounding the Middle East conflict remains uncertain, and traders are unclear about the market's next direction. Currently, bulls maintain the advantage, but a new escalation in the conflict could strengthen bearish pressure.

The pound's rally began with a "Three Drives Pattern." Thus, traders received a bullish signal at the very start of the move, and the broader trend remains bullish. At present, the ceasefire in the Middle East remains fragile, but the conflicting parties are still attempting to negotiate, at least according to media reports. Official talks may resume — but so may the conflict itself. The Strait of Hormuz remains under a dual blockade, though Tehran and Washington appear to be moving toward lifting it. The situation is gradually improving, but this assessment is based only on unverified information. Markets are currently filled with optimism, yet a harsh reality check could arrive at any moment.

The "Three Drives Pattern," marked on the chart with a triangle, allowed bulls to go on the offensive. Imbalance 18 enabled traders to open long positions, while imbalance 19 provided another buying opportunity. Thus, within the current impulse move, we received three bullish signals, and this week a new bullish signal was formed within imbalance 20. However, while geopolitics allowed bulls to launch another advance, it could just as easily turn in favor of the bears.

Friday's economic news background favored the bears. US labor market statistics came in stronger than traders had expected, yet the market once again ignored them. Over recent months, traders have almost become accustomed to such behavior. Today, one of the most important reports — which previously triggered major market reactions — was effectively ignored.

In the United States, the overall news background still suggests that, in the long term, little can be expected other than continued dollar weakness. Even the conflict between Iran and the U.S. changes very little in this regard. Geopolitics temporarily reminded markets of the dollar's safe-haven status for about two months, but overall the long-term outlook for the U.S. dollar remains difficult. The U.S. labor market continues to weaken, the economy is approaching recession, and unlike the ECB and the Bank of England, the Federal Reserve is not expected to tighten monetary policy in 2026. In addition, four major protests against Donald Trump have already taken place across the United States, while the possible departure of Jerome Powell could further worsen the situation for the dollar — especially if the FOMC under Kevin Warsh adopts a more dovish stance. From an economic perspective, I see no fundamental basis for sustained dollar growth.

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

• U.S. – Existing Home Sales (14:00 UTC)

The May 11 economic calendar contains only one secondary event. Therefore, the influence of the economic backdrop on market sentiment on Monday is expected to be extremely limited.

GBP/USD Forecast and Trading Advice:

The long-term outlook for the pound remains bullish. The "Three Drives Pattern" warned traders about the beginning of the rally, and since then three bullish patterns and three bullish signals have already formed. Therefore, despite geopolitical risks, I continue to expect further appreciation of the pound under current conditions. However, it must be acknowledged that geopolitics could easily spoil the bulls' momentum. My target for the pound remains the 2026 high at 1.3867. The reaction to imbalance 20 allowed traders to open long positions for the third or fourth time already.