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04.05.2026 12:49 AM
The GBP/USD currency pair demonstrated decent growth over the past week, although most of that occurred on a single day—Thursday. On that day in the UK (as well as throughout the past week), there was only one significant event—the meeting of the Bank of England. Thus, it is clear that this was what triggered the strong rise of the British currency. In previous articles, we have regularly noted that a central bank meeting is not just an important event; it is one that the market often reacts to impulsively, driven by emotion. Therefore, one should not rush to conclusions in the hours following the announcement of the meeting results.
Consider this: the European Central Bank and the BoE essentially made similar decisions. Both central banks left rates unchanged in April but announced possible rate hikes this summer if the situation in the Middle East does not improve and inflation continues to accelerate. However, the euro received a very weak response to the ECB's decision, while the British pound literally soared. Why? The answer can only be one—the voting results of the BoE's Monetary Policy Committee. The ECB does not publish its voting results, while the BoE does. And even though the results of this voting completely aligned with forecasts, the market still spotted a "hawkish" tone from the British central bank.
On the daily timeframe, the GBP/USD pair broke through the Ichimoku cloud and the important Senkou Span B line on Thursday, so we expect new growth in the coming weeks. The only thing that could prevent the British currency from returning to its highs of the last four years is geopolitics. If Donald Trump moves toward active bombardments of Iran, investors will again begin to flee to safety. However, just as the probability of reaching an agreement remains low, the likelihood of new bombings in Iran remains low as well. Trump has already declared total victory over Iran and the winding down of military operations multiple times. Thus, a new escalation is only possible if Iran begins attacking American warships that block its ports.
Trump has taken a superior position. Blocking the Strait of Hormuz is relatively cheap, but the world's oil and gas shortage, along with high energy prices, allows the United States to earn much more than before the war from exporting these energy resources. "Hundreds of billions of dollars are flowing back to America," and soon the "golden age of Trump" will arrive. A falling dollar also plays into the hands of the US president. The cheaper the dollar, the more eager foreign states will be to purchase energy resources, raw materials, and various goods from the US. Therefore, if Iran does not escalate again, the dollar will continue to fall. This is simply because this scenario suits almost everyone right now.
The BoE could only exacerbate the situation in the summer. If the central bank tightens monetary policy due to high inflation, the British pound will see even greater demand. Meanwhile, the Fed will remain immobilized due to the labor market and the new head, Kevin Warsh, who is likely to adhere to a "dovish" policy.
The average volatility of the GBP/USD pair over the last 5 trading days is 97 pips, which is considered "average" for this pair. On Monday, May 4, we expect movement within a range limited by 1.3477 and 1.3671. The upper channel of the linear regression is directed downward, indicating a bearish trend. The CCI indicator has entered the overbought area and created a "bearish" divergence, signaling a downward pullback that has already completed.
The GBP/USD currency pair continues to recover after two "months of geopolitics." Trump's policies will continue to pressure the US economy, so we do not expect the US dollar to grow in 2026. Therefore, long positions targeting 1.3916 and above remain relevant when the price is above the moving average. If the price is below the moving average line, shorts targeting 1.3477 and 1.3428 can be considered on technical grounds. In recent weeks, the British currency has recovered, while the geopolitical factor has lost its influence on the market.
