On the hourly chart, the GBP/USD pair on Tuesday made two rebounds from the 1.3437 level and one rebound from the support level of 1.3341–1.3352. Thus, a sideways movement has formed. Today, another rebound from the 1.3341–1.3352 level will again allow expectations of growth toward the 1.3437–1.3465 level. A consolidation below the 1.3341–1.3352 level will allow traders to expect some decline toward the support level of 1.3199–1.3214.

The wave situation has begun to shift toward a "bullish" outlook. The last completed downward wave did not break the previous low, while the last upward wave exceeded the previous peak by only a few points. The news background for the British currency has been weak in recent months, while geopolitics has given bears a complete advantage in the market. The war in Iran remains the main reason for the strengthening of the U.S. dollar, but this week the geopolitical background has started to shift in favor of the bulls.

Tuesday's news background suggested bearish attacks, as both business activity indices in the UK showed worse values than a month earlier. That is exactly why we saw the pound decline during the day. Today, the UK released an inflation report that could be the last more or less positive one for the Bank of England. February inflation remained unchanged compared to January at 3%. Core inflation slightly accelerated to 3.2%. These values can be considered high compared to U.S. or European data. At the same time, 3% inflation had allowed traders to expect further monetary policy easing. However, with the outbreak of the conflict in the Middle East, the Bank of England significantly raised its forecasts for the consumer price index, with the first acceleration expected as early as March. Thus, the next report may show a serious increase in the indicator, forcing the Bank of England to tighten monetary policy. Of course, if Donald Trump manages to end the war with Iran (which he himself started) in the near future, the inflation spike will be short-lived and mild. In that case, central banks may pause for several months to assess how strong inflation will be during wartime. But overall, the British regulator is now leaning toward raising the interest rate.

On the 4-hour chart, the pair has consolidated above the downward trend channel, which so far does not provide much. The "bearish" trend may be over, but a new escalation in the Middle East could lead to a renewed bearish offensive toward the 38.2% retracement level at 1.3145. A consolidation above the 1.3369–1.3391 level allows traders to expect continued growth toward the 0.0% retracement level at 1.3786. No emerging divergences are observed in any indicator today.

Commitments of Traders (COT) report:

The sentiment of the "Non-commercial" trader category became less bearish over the last reporting week, although bears still fully dominate the initiative overall. The number of long positions held by speculators decreased by 4,977, while short positions decreased by 23,659. The gap between long and short positions is now essentially: 44,000 versus 110,000. In recent weeks, bears have dominated, which raises no questions given the geopolitical situation. I still do not believe in a bearish trend for the pound, but now everything will depend not on economic indicators, Trump's trade policy, or central bank monetary policy, but on the duration, scale, and consequences of the war in the Middle East.

Over the past year, the pound looked like a safer currency compared to the dollar—more stable and with a clearer economic outlook. However, in recent months, first a correction began while maintaining a bullish trend, and then the conflict in the Middle East started escalating almost daily. Geopolitics remains the only reason for the strengthening of the U.S. currency.

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

UK – Consumer Price Index (09:00 UTC).

On March 25, the economic calendar contains only one entry, but it is quite important. The impact of the news background on market sentiment will be present throughout the day.

GBP/USD forecast and trading advice:

Selling the pair was possible after a rebound on the hourly chart from the 1.3437–1.3465 level with targets at 1.3341–1.3352 and 1.3214. These trades can be kept open today. Buying will become possible after a rebound from the 1.3341–1.3352 level with targets at 1.3437–1.3465 and 1.3526–1.3539.

Fibonacci levels are drawn from 1.3341–1.3866 on the hourly chart and from 1.2104–1.3786 on the 4-hour chart.