On the hourly chart, the GBP/USD pair remained within the 1.3408–1.3454 level on Tuesday. Today, a rebound from the 50.0% Fibonacci retracement level at 1.3408 would favor the pound and support a move toward the resistance level of 1.3454–1.3466. Consolidation below the 1.3408 level would allow traders to expect a further decline toward the support level of 1.3349–1.3355. Bulls have so far been unable to launch a meaningful advance.

The wave structure has shifted to a bullish outlook as the market has begun to believe in the possibility of an agreement between Iran and the United States. The latest completed downward wave failed to break below the previous low, while the new upward wave exceeded the previous peak. If an agreement is signed by the end of the week and neither side violates the ceasefire or withdraws from negotiations, bulls may continue their offensive. However, their momentum currently appears extremely weak and unconvincing.

Tuesday's news background was limited, particularly for the pound. However, this morning the UK consumer price inflation report for May was released. Traders expected inflation to rise to 3.0%–3.1% year-on-year, but the actual figure remained at 2.8% year-on-year, unchanged from the previous month. Core inflation increased from 2.5% to 2.6% year-on-year but also came in below expectations. The British pound declined by approximately 20 points during the morning session, and this market reaction reveals several important points.

First, the reaction was very muted. Since the data missed market expectations, a stronger move might have been expected. The lack of a significant reaction suggests that traders are focused on the upcoming meetings of the Bank of England and the Federal Reserve, as well as the potential agreement between Iran and the United States expected on Friday.

Second, subdued inflation significantly reduces the likelihood of a Bank of England rate hike in the coming months. Several weeks ago, the market was still pricing in the possibility of further monetary policy tightening, but there is currently little justification for such expectations. As a result, the European Central Bank remains the only major central bank that has already raised rates and may do so again at its next meeting in July. Nevertheless, even this has not led to significant strength in the euro. Traders remain reluctant to take aggressive positions. Perhaps the meetings of the Federal Reserve and the Bank of England will provide fresh direction.

On the 4-hour chart, GBP/USD rebounded from the 23.6% Fibonacci retracement level at 1.3327 and advanced toward the 38.2% Fibonacci level at 1.3429. A rebound from this level would favor the US dollar and trigger a decline toward 1.3327. Consolidation above 1.3429 would increase the probability of a continued advance in the pound. No emerging divergences are currently observed on any indicator.

Commitments of Traders (COT) Report:

Sentiment among the Non-commercial category became more bearish during the latest reporting week. The number of Long positions held by speculators decreased by 7,944, while the number of Short positions increased by 4,051. The gap between Long and Short positions now stands at approximately 46,000 versus 109,000.

Bears have dominated in recent months, which is hardly surprising given geopolitical developments in the Middle East and the political crisis in the United Kingdom. The bearish advantage currently exceeds a two-to-one ratio.

I still do not believe in a sustained bearish trend for the pound. However, in the near term, market direction will depend less on economic data, Trump's trade policy, or central bank monetary policy, and more on the duration, scale, and consequences of the conflict in the Middle East. In recent weeks, the market had adjusted to the expectation of a prolonged conflict, but the latest developments suggest that a ceasefire may still be achieved, although the process is unlikely to be quick or straightforward.

News Calendar for the United Kingdom and the United States:

• United Kingdom – Consumer Price Index (06:00 UTC)
• United States – Retail Sales (12:30 UTC)
• United States – FOMC Interest Rate Decision (18:00 UTC)
• United States – FOMC Dot Plot (18:00 UTC)
• United States – Federal Reserve Press Conference (18:30 UTC)

The economic calendar for June 17 contains five events, four of which are considered significant. Therefore, the impact of the economic news flow on market sentiment is expected to be felt throughout Wednesday, beginning in the early hours of trading.

GBP/USD Forecast and Trading Tips:

Short positions were possible following a rebound from the 1.3454–1.3466 resistance level on the hourly chart, targeting 1.3408 and 1.3349–1.3355. The first target has already been reached. New short positions may be considered after a close below 1.3408. Long positions may be considered today following a rebound from the 1.3408 level, targeting 1.3454–1.3466 and 1.3526–1.3539.

Fibonacci retracement levels are drawn from 1.3158 to 1.3655 on the hourly chart and from 1.3866 to 1.3158 on the 4-hour chart.