GBP/USD 5-Minute Chart Analysis

The GBP/USD pair once again bounced off its ascending trendline on Friday, suggesting a possible continuation of the uptrend.

On Monday, the pair plunged sharply due to Donald Trump's comments, causing a false breakout below the trendline. However, we previously noted that this was a false breakout, and the bullish movement would resume. The Senkou Span B line was tested, further increasing the likelihood of a rebound.

Similar to the euro, the pound does not yet appear to have completed its correction. If the trendline holds, we can expect another corrective upward movement. However, the British pound is struggling, much like the euro, due to weak macroeconomic data from the UK. The Bank of England's policy decision last week prevented further losses, but its tone was more dovish than hawkish. Governor Andrew Bailey refrained from making bold statements about imminent rate cuts, which slightly supported the pound, allowing it to continue its correction for another few weeks.

On the 5-minute chart, Friday's movements appeared chaotic. A decent buy signal was formed around 1.2445, but by the start of the US session, it became clear that the rally would not continue. US labor market data was generally strong, confirming that the pound had limited upward potential. Subsequent signals clustered within the 1.2349–1.2445 range, which included multiple Ichimoku indicator levels, making it difficult to trade effectively.

Commitments of Traders (COT) Report

COT reports indicate that the sentiment among commercial traders fluctuates frequently. The red and blue lines, representing the net positions of commercial and non-commercial traders, cross frequently and hover near the zero mark. Currently, these lines remain close to each other, indicating that buy and sell positions are relatively balanced.

On the weekly timeframe, price initially broke above the 1.3154 level, then fell back to the trendline, which was subsequently breached. Breaking the trendline suggests that GBP/USD is likely to continue declining. However, there was also a bounce off the previous local low, suggesting a possible range-bound market (flat movement).

According to the latest COT report, the Non-commercial group closed 16.4K long (buy) positions and 2.9K short (sell) positions. This resulted in a net position decline of 13.5K, which is not positive for the pound.

The fundamental background remains weak for the British pound. There are no strong drivers for long-term GBP strength. The downtrend is likely to persist, and net positioning data suggests waning demand for GBP.

GBP/USD H1 Chart Analysis

The GBP/USD pair remains in a local uptrend despite the trendline breach. However, there is no fundamental reason for the pound's long-term growth. The short-term trend remains bullish, meaning GBP could continue rising in the near term.

On higher timeframes, the bearish trend remains intact, so long-term long positions are not advisable. The British pound's position is not fundamentally strong.

The important levels for GBP/USD trading are: 1.2052, 1.2109, 1.2237–1.2255, 1.2349, 1.2429–1.2445, 1.2511, 1.2605–1.2620, 1.2691–1.2701, 1.2796–1.2816, as well as the Senkou Span B (1.2384) and Kijun-sen (1.2441). Ichimoku lines may shift during the day, so traders should adjust accordingly. Set a Stop Loss to breakeven if the price moves 20 points in the correct direction, to minimize risk from false breakouts.

No significant economic events are scheduled in the UK or the US. As a result, market volatility may remain low, making it difficult for GBP/USD to break key levels like Senkou Span B and the trendline.

Chart Explanations

• Thick red lines – Major support and resistance levels, where price may reverse.
• Ichimoku indicator lines (Kijun-sen, Senkou Span B) – Strong support/resistance levels derived from the H4 chart.
• Thin red lines – Extremes where price has previously reversed. These serve as potential trade signals.
• Yellow lines – Trendlines, trend channels, and other technical patterns.
• COT Indicator (on charts) – Shows the net position of each trader category.