Forex Analysis & Reviews: 04.04.2025 - GBP/USD. April 4th. What Can...

04.04.2025 10:21 AM

GBP/USD. April 4th. What Can the Dollar Count On?

On the hourly chart, the GBP/USD pair once again soared on Thursday, breaking through several levels. Consolidation below the 1.3151 level allows for expectations of a slight decline toward the 127.2% Fibonacci level at 1.3003; however, even a 100-point rebound for the dollar now seems extremely unlikely. Any escalation in the trade war—on either side—will likely be seen by traders as a signal to resume dollar selling.

The last completed downward wave failed to break the previous low, while the new upward wave easily broke the last high. Thus, the formation of a bullish trend continues. Most traders still refuse to buy the dollar regardless of the economic data, as Donald Trump continues to introduce new tariffs, which will eventually hurt U.S. economic growth—as well as that of many other countries. For this bullish trend to shift into a bearish one, the price would need to consolidate below the 1.2865 level.

The news background for the British pound on Thursday held no value. All reports were ignored, as the market remains fully focused on the trade war theme. Today, the U.S. will release important data on labor market conditions and unemployment, which should, in theory, affect the FOMC's sentiment and thus impact the dollar. However, at the moment, the dollar is plunging due to Donald Trump, and no Nonfarm Payrolls or unemployment stats are likely to save it. Even Jerome Powell's speech on Friday evening has very little chance of turning the tide. What can the Fed Chair say under the current circumstances? Powell may speak only of growing economic uncertainty, the threat of recession, and rising inflation. But even before the trade war, the Fed maintained a relatively hawkish stance, and the dollar is now reacting only to Trump. A stronger hawkish tone from the Fed is unlikely. Even if the dollar rises slightly on Friday, the next tariff package will quickly bring it back down.

On the 4-hour chart, the pair maintains its bullish trend. I do not expect a strong decline in the pound until the price closes below the ascending channel. A rebound from the 76.4% Fibonacci level at 1.3118 could work in the dollar's favor, but in my view, the dollar currently has no chances. A bullish divergence on the CCI indicator warned of a new upward movement, though that wasn't the cause of the pound's rise or the dollar's fall. The RSI is overbought, but it is unlikely to cause a significant drop.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader group became more bullish over the last reporting week. The number of long positions held by speculators increased by 13,075, while short positions decreased by 1,806. Bears have lost their market advantage. The gap between long and short positions now stands at nearly 44,000 in favor of the bulls: 109,000 vs. 65,000.

In my view, the pound still has downward potential, but recent events may force the market to reverse in the long term. Over the past 3 months, the number of long positions has risen from 98,000 to 109,000, while shorts have declined from 78,000 to 65,000. More significantly, over the last 8 weeks, longs have risen from 59,000 to 109,000, and shorts have dropped from 81,000 to 65,000.

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

U.S. – Nonfarm Payrolls (12:30 UTC)
U.S. – Unemployment Rate (12:30 UTC)
U.S. – Average Hourly Earnings (12:30 UTC)
U.S. – Speech by Fed Chair Jerome Powell (15:25 UTC)

Friday's economic calendar contains several important releases. However, in my view, all of these major data points are unlikely to have any meaningful impact on the dollar. They may slightly influence market sentiment—but not by much.

GBP/USD Forecast and Trading Tips:

I would only recommend selling the pair after a clear rebound from a key level. But yesterday, there were no such signals, and it's unlikely any will form today. Right now, it's hard to even define levels from which a decline might begin. Buying opportunities are possible on a rebound from the 1.3003 level on the hourly chart, targeting 1.3151 and 1.3249.

Fibonacci grids are drawn from 1.2809–1.2100 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.