GBP/USD 5-Minute Analysis
On Friday, the GBP/USD currency pair corrected against Monday's growth and the broader uptrend. There were no clear reasons for the movements on any day of the week—Monday through Friday. Therefore, we believe that the market trades according to its rules, expectations, and instincts. Most of last week's U.S. macroeconomic data were disastrous, and Friday's data didn't do much to redeem the situation. If the U.S. dollar were currently showing a strong and confident rise, we might assume its "dark days" were behind it. However, what we're seeing is merely a technical correction. The market continues to ignore most macro and fundamental factors.
The key issue now is the unpredictability of Donald Trump's next moves. No one can say with certainty that the U.S. president won't introduce new tariffs. And if that's the case, then it's equally uncertain whether the dollar's decline is truly over. The only things the greenback can currently hope for are monetary policy easing from the Bank of England or Trump's tariff reductions (or reversals). A purely technical correction also remains a possibility.
From a technical perspective, Friday's movements didn't follow any predictable logic. As we've mentioned many times, the market is ignoring macroeconomic data and technical indicators. None of the levels or lines performed as expected during Friday's session. At this stage, we recommend opening trades only when clear and well-defined signals are formed.
COT Report
COT reports for the British pound show that commercial traders' sentiment has constantly shifted in recent years. The red and blue lines—representing net positions of commercial and non-commercial traders—frequently intersect and mostly hover near the zero mark. That's the case now, indicating a relatively balanced number of long and short positions.
On the weekly timeframe, the price initially broke through the 1.3154 level, then surpassed the trend line, returned to 1.3154, and broke it again. Breaking the trend line suggests a high probability of further pound depreciation. However, the dollar continues to fall due to Donald Trump. Therefore, despite technical signals, news about the trade war could keep pushing the pound higher.
According to the latest report on the British pound, the "Non-commercial" group closed 2,900 BUY contracts and 6,400 SELL contracts. As a result, the net position of non-commercial traders increased by 3,500 contracts.
The fundamental backdrop still does not justify long-term buying of the pound sterling, and the currency remains at real risk of resuming a broader downtrend. The pound has gained significantly recently, but it's important to understand that this was due to Donald Trump's policies.
GBP/USD 1-Hour Analysis
In the hourly timeframe, GBP/USD continues its upward trend, though not as strongly as before, with occasional corrections. The pound has seen substantial growth in recent months, but it bears no credit—the entire move results from a falling dollar driven by Trump. And it's not over yet. The market pays no attention to macroeconomic data, and chaos and inconsistency persist with no logical structure to price movements.
The following levels are relevant for trading: 1.2691–1.2701, 1.2796–1.2816, 1.2863, 1.2981–1.2987, 1.3050, 1.3125, 1.3212, 1.3288, 1.3358, 1.3439, 1.3489, and 1.3537. Senkou Span B (1.3322) and Kijun-sen (1.3348) may also serve as sources of signals. A Stop Loss should be moved to breakeven if the price moves 20 pips in the right direction. Ichimoku indicator lines may shift during the day and should be monitored when determining signals.
No significant events or reports are scheduled for Monday in the UK, while the U.S. will release the ISM Services PMI. It's a fairly important indicator, but it would be no surprise if the market ignores it.
Illustration Explanations:
- Support and resistance price levels – thick red lines where movement may end. They are not trading signal sources.
- Kijun-sen and Senkou Span B lines—These are strong Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour one.
- Extremum levels – thin red lines where the price has previously rebounded. These act as trading signal sources.
- Yellow lines – trend lines, trend channels, and other technical patterns.
- COT Indicator 1 on the charts – the size of the net position for each category of traders.
