In my morning forecast, I focused on the 1.2486 level and planned to make trading decisions based on it. Let's look at the 5-minute chart and analyze what happened. A decline and a false breakout at this level provided a long entry opportunity, aligning with the GBP/USD uptrend observed in recent days. As a result, the pair reached 1.2519. Short positions from this level on a false breakout did not yield expected results. The technical picture has been revised for the second half of the day.

Long Position Strategy for GBP/USD:

Despite weaker-than-expected U.K. services activity data, which fell short of preliminary estimates, the British pound's upward momentum remains intact as it targets a new monthly high.

Key U.S. data releases ahead include:

• ISM Services PMI
• Composite PMI
• ADP Employment Change

Weak employment data could accelerate GBP/USD growth, reinforcing the bullish outlook.

If GBP/USD declines, I will look for a false breakout at 1.2516 to enter long positions, targeting 1.2571 (last month's high). A break and retest of this range could trigger an entry for further growth to 1.2604, strengthening the bullish market. The final target is 1.2638, where I plan to take profits.

If GBP/USD falls further and bulls show no activity at 1.2516, selling pressure on the pound will increase. A false breakout at 1.2463 would be the next buy signal. I will only buy on an immediate rebound from 1.2421, targeting a 30-35 point intraday correction.

Short Position Strategy for GBP/USD:

Sellers remain passive, which is surprising given ongoing geopolitical uncertainty surrounding U.S. trade policy and Donald Trump's new trade war strategies.

If bears want to halt the bullish trend, they need to act at the 1.2571 resistance level. A false breakout at 1.2571 will provide a short entry point, aiming for 1.2516 (an intermediate level). A break and retest of 1.2516 from below would trigger stop-loss orders, clearing the way for 1.2463, where moving averages currently favor buyers. The final downward target is 1.2421, where I will take profits.

If demand for GBP remains strong in the second half of the day and bears fail to act at 1.2571, the bullish market will continue. I will postpone short positions until a test of 1.2604, where I will sell only after a failed breakout. If there's no downside movement at 1.2604, I will look for shorts at 1.2638, but only for a 30-35 point correction.

COT (Commitment of Traders) Report:

The COT report from January 28 showed a decline in both long and short positions. The number of long non-commercial positions fell by 16,365 to 59,331. The number of short non-commercial positions decreased by 2,950 to 81,003. The gap between longs and shorts widened by 1,867, indicating a shift toward sellers.

The U.K. economy faces high inflation, but growth is stagnating, limiting policy options for the Bank of England. A rate cut at the next BoE meeting is likely, which could weaken the pound in the long run.

Indicator Signals

Moving Averages

Trading remains above the 30- and 50-period moving averages, signaling continued GBP strength.

Note: The author's moving average calculations are based on hourly (H1) charts, which differ from the classic daily (D1) definitions.

Bollinger Bands

In case of a decline, the lower Bollinger Band around 1.2460 will act as support.

Key Indicator Descriptions:

• Moving Average (MA) – Identifies trend direction by smoothing market noise.
  • 50-period MA (Yellow)
  • 30-period MA (Green)
• MACD (Moving Average Convergence/Divergence) – Measures momentum.
  • Fast EMA: 12-period
  • Slow EMA: 26-period
  • Signal SMA: 9-period
• Bollinger Bands – Volatility indicator, 20-period setting.
• Non-commercial traders – Speculative investors, including individual traders, hedge funds, and large institutions, using the futures market for speculative purposes.
• Long non-commercial positions – The total open long positions held by speculative traders.
• Short non-commercial positions – The total open short positions held by speculative traders.
• Net non-commercial position – The difference between long and short speculative positions.