FX.co ★ GBP/USD – Smart Money Analysis: Buyers Respond Quickly

The GBP/USD pair continues to rise within its yearly trading range. At the end of last week, strong U.S. labor market data prompted a sharp bearish counterattack, but sellers were unable to break through Bullish Imbalance 32. As noted earlier, a corrective pullback would actually be a favorable development for buyers, as it would provide an opportunity to open new long positions. This scenario has materialized. Sellers lacked the strength to break through Imbalance 32, the bullish momentum within the trading range remains intact, and the target near 1.3670 has not yet been reached. Today, the market demonstrated a clear reaction to the bullish pattern. Therefore, the short-term outlook remains bullish, and long positions remain justified.

The U.S. dollar appears to have exhausted its upward potential in 2026, while the euro has long been due for a recovery similar to that of the British pound.

Last week, the Bank of England implemented its first monetary policy tightening, which is likely to support the pound. Traders' reaction to this decidedly hawkish development was rather mixed. Buyers did not resume their advance, even though the Bank of England's meeting outcome could be considered as hawkish as possible. Bank of England policymakers not only raised interest rates, as expected, but also did so unanimously. Therefore, there are solid grounds to expect further monetary policy tightening. The dollar dominated the end of last week, but the pound could resume its advance this week. The only significant risk to the British currency is the U.S. inflation report.

Another important factor supporting the pound's outlook is that traders expect the Bank of England to implement at least three rate hikes in total, while the Fed is expected to deliver only one or, at most, two. Of course, the course of events in 2027 remains uncertain, but this is currently the consensus forecast. Consequently, the Bank of England could raise interest rates more aggressively than the Fed over the coming months, which is unlikely to support further gains in the U.S. dollar. In the near term, only geopolitical developments could support the dollar, particularly if Donald Trump decides to resume military action against Iran. However, in recent days, Trump has spoken more frequently about reconciliation, negotiations, and concessions than about launching new strikes. This suggests that Iran and the United States may have begun moving toward a ceasefire.

Do sellers still have any prospects? The downward potential appears limited. Sellers pushed the dollar to the upper extreme of its trading range but failed to break out of it. There were several compelling reasons to buy the dollar in 2026, but there were also factors supporting the British pound that traders frequently overlooked. Thus, unlike the euro, the dollar and the pound have generally followed a logical pattern throughout the year, alternating between periods of appreciation and depreciation that collectively form a trading range.

There was no significant economic news on Monday. However, positive geopolitical developments reduced demand for safe-haven assets, including the U.S. dollar. Reports increasingly suggest that Iran and the United States may be willing to make mutual concessions, creating a favorable environment for further gains in the pound. Over the longer term, the outlook remains positive.

The overall fundamental background continues to favor a weaker U.S. dollar over the long term. The conflict between Iran and the United States has not changed this outlook. Geopolitical tensions reminded the market of the dollar's safe-haven status, but the conflict is currently on hold and could even move toward a resolution. Therefore, unless hostilities resume, a renewed bearish advance against the pound appears unlikely. Further escalation remains possible, as Donald Trump's actions are difficult to predict. If the next round of negotiations fails, Trump could order additional strikes, and even the Democrats might be unable to prevent such a decision.

Economic Calendar for the United States and the United Kingdom

• United States – Consumer Price Index (13:30 UTC).

On November 10, the economic calendar contains one important release. Economic data is expected to have a significant impact on market sentiment during the second half of Tuesday's trading session.

GBP/USD Forecast and Trading Tips

The long-term outlook for the British pound remains bullish. Buyers have controlled the market in recent weeks, although their advance has remained confined to the trading range, which is clearly visible on the daily chart and remains intact. The liquidity sweep below the June lows allowed buyers to regain control of the market. Therefore, the short-term outlook is also bullish.

A new buy signal has formed within Imbalance 32, as anticipated. Traders had an opportunity to open additional long positions. At this stage, the focus is on maintaining existing long positions, which could have been opened following the formation of either of the two most recent imbalances. The pound's targets remain near the upper boundary of the trading range at 1.3670.