FX.co ★ GBP/USD Review. August 25. Donald Trump Can't Live Without War

The GBP/USD currency pair experienced a slight correction on Monday, but overall it did not show any notable movement (as expected). We noted the day before that the Monday events calendar was empty, meaning traders had nothing to react to throughout the day. Of course, there were some news items, but none suggested a significant change in the value of the dollar or the British pound.

A key theme for the currency market remains Donald Trump's policy, which entails the formation of new conflicts around the world. Just this weekend, it became known that Canada and the U.S. failed to reach a trade deal, prompting Washington to impose 50% tariffs on most Canadian imports. Canadian Prime Minister Mark Carney announced that Ottawa will introduce mirrored tariffs starting September 8, to which Donald Trump's administration has already begun crafting a new package of tariffs. If anyone has forgotten the phenomenon known as a trade war, now is the time to refresh their memory of 2025, when the U.S. dollar was in active decline.

A new round of trade confrontation could also begin with China, with which a tenuous agreement was reached last year. Recall that in 2025, import tariffs between the two countries reached up to 250%. This year, Trump thinks that relations between China and the U.S. have become too dull and uneventful, hence the need to shake things up a bit. However, this time, Trump intends to fight not against universal injustice to America, but against long-suffering Iran. Trump has decided to impose a full financial blockade on Tehran, completely cutting it off from financial flows. Since America cannot encircle Iran and generally wants to keep the conflict low-key, Trump envisions that other nations should join in the confrontation against Iran. Last year, Trump did not receive support from European countries, and this year he aims to involve countries with which Tehran has allied relationships.

Primarily, this concerns China, which is the main importer of Iranian oil. Trump believes that all countries dealing with Iran must immediately cease this "nonsense" and side with the U.S. We can almost guarantee that Beijing does not share this view and will remain committed to its political course. Since Trump has publicly declared grand sanctions and tariffs against any country supporting Iran, it can be assumed that new tariffs and restrictions will be proposed against China. In response, Beijing will impose its own tariffs and restrictions on the U.S. Thus, the second half of 2026 may unfold under the aegis of a second round of a global trade war. If anyone does not remember, the trade war was the main cause of the American currency's decline last year. Therefore, yet another factor for the dollar's decline adds to the already lengthy list.

The average volatility of the GBP/USD pair over the past 5 trading days stands at 60 pips. For the pound/dollar, this value is considered "average." On Tuesday, August 25, we expect movement within a range limited by levels 1.3572 and 1.3692. The upper linear regression channel has shifted upward, indicating an uptrend. The CCI indicator has once again entered the overbought zone, signaling a potential correction.

Nearest Support Levels:

S1 – 1.3611

S2 – 1.3550

S3 – 1.3489

Nearest Resistance Levels:

R1 – 1.3672

R2 – 1.3733

R3 – 1.3794

Trading Recommendations:

The GBP/USD currency pair maintains an upward trend. Trump's policies will continue to exert pressure on the U.S. economy, so we do not expect long-term growth for the American currency. So far, 2026 has turned out to be super-positive for the dollar due to geopolitical factors, but every tale has its end.

The weekly timeframe shows a flat market between levels 1.3150 and 1.3780 within the framework of a four-year upward trend, allowing for continued growth of the British currency in the medium term. Long positions with targets at 1.3672 and 1.3692 can be considered when the price is above the moving average. If the price is below the moving average line, short trades can be made with targets at 1.3489 and 1.3428.

Notes on Illustrations:

• Linear Regression Channels help identify the current trend. If both are pointing in the same direction, it indicates a strong trend.
• Moving Average Line (settings 20,0, smoothed) determines the short-term trend and the direction in which to trade.
• Murray Levels – target levels for movements and corrections.
• Volatility Levels (Red Lines) – the likely price channel in which the pair will trade over the next 24 hours based on current volatility metrics.
• CCI Indicator – its entry into the oversold area (below -250) or the overbought area (above +250) indicates an impending trend reversal in the opposite direction.