GBP/USD. Smart Money. Trump's Speech Changed Nothing

[Ben Graham]

The GBP/USD pair continues to decline within a broader bullish trend. The only active pattern that may currently be relevant for traders is bearish imbalance 16 — a bearish imbalance within a bullish trend. This raises serious doubts about whether it is worth trading this imbalance with short positions. First, the imbalance must be tested and produce a price reaction; only then can the feasibility of opening short trades be discussed. However, in my view, the bears have already extracted the maximum benefit from the news background over the past month. I believe the bearish advance may end soon, as even the factor of escalating tensions between Iran and the United States has already been priced in by traders.

Yesterday evening, U.S. President Donald Trump delivered a speech before Congress. The address lasted about 1 hour and 40 minutes. During that time, America and the rest of the world heard many general and emphatic statements about a "Golden Age of America," but very little concrete detail. One of the topics of Trump's speech was Iran. However, the market did not learn anything new. The U.S. president remains determined to launch a military operation against the current Iranian leadership with the aim of removing it from power. Negotiations between Tehran and Washington continue to make very limited progress, and at this pace it may take years to resolve all disputed issues. However, the military fleet stationed in the Persian Gulf does not have that much time. Maintaining such a large number of ships, personnel, aircraft, and support vessels requires substantial financial resources. Therefore, Trump is unlikely to keep an entire flotilla near Iran's shores for several more months while waiting for concessions from Tehran. Either negotiations yield results soon, or Iran may face a large-scale invasion.

The bullish trend in the pound remains intact in any case. As long as it holds above 1.3012, I would focus more on bullish signals. The pound's decline may be significant, but it could also end at any moment. At present, imbalance 16 has not yet generated any signal. There are currently no grounds for opening new trades.

The news background on Wednesday was absent. During the day, the bulls made a weak attempt to push higher, while the pound is moving toward imbalance 16, which is the only area of interest for traders in the near term. For now, the only option is to wait — either for greater clarity in the current chart structure or for new signals to form.

In the United States, the overall news background continues to suggest little reason to expect long-term strength in the dollar. The situation in the U.S. remains complicated. Labor market data has disappointed more often than it has exceeded expectations. Three of the last four FOMC meetings ended with dovish decisions. Trump's military actions and threats toward Denmark, Mexico, Cuba, Colombia, Iran, EU countries, Canada, and South Korea; the criminal case against Jerome Powell; another government shutdown; and the scandal involving U.S. elites related to the Epstein case all contribute to the picture of political and structural instability in the country. In my opinion, the bulls have sufficient grounds to continue their advance throughout 2026.

A bearish trend would require strong and consistent positive news for the dollar, which is difficult to expect under Donald Trump. Moreover, a strong dollar does not align with the president's interests, as it would maintain a trade deficit. Therefore, I still do not believe in a bearish trend for the pound. Too many risk factors continue to weigh on the dollar. Short positions could be considered based on bearish patterns, but I would not personally recommend this to traders. I view the recent decline in the pair as partly driven by exceptional circumstances.

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

U.S. – Change in Initial Jobless Claims (13:30 UTC).

On February 26, the economic calendar contains only one minor entry. The impact of the news background on market sentiment on Thursday is expected to be minimal or absent.

GBP/USD Forecast and Trading Advice:

The broader outlook for the pound remains bullish, although the short-term picture has turned bearish. There are currently no active bullish patterns. Only bearish imbalance 16 remains, and price must first return to this zone and produce a reaction before traders can consider potential short positions.

It should be noted that the pound's decline in recent weeks has been strong enough to temporarily shift the outlook from bullish to bearish, largely due to a specific sequence of events. If Donald Trump had not repeatedly threatened military action against Iran and deployed warships to the Persian Gulf, such a sharp drop in the pound would likely not have occurred. I believe this decline may end as unexpectedly as it began. In my view, the broader trend has not turned bearish in recent weeks.

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