GBP/USD 5-Minute Analysis
On Wednesday, the GBP/USD currency pair resumed its upward movement. As previously noted, the British currency currently has no valid reason to decline against the U.S. dollar—specifically, against the U.S. dollar. The market continues to seize on any factor or excuse to sell the greenback. Traders no longer believe Donald Trump's statements about a great future and lucrative deals. The American people are taking to the streets to protest the Republican's immigration policy. We believe even these reasons are enough to support the dollar's continued decline.
However, yesterday, the market found another excuse to sell the dollar. May inflation remained unchanged, while the market had expected an increase to 2.9%. Meanwhile, core inflation rose year-over-year but not as strongly as the market anticipated. Since both inflation readings came in below forecasts, the market assumed the Federal Reserve might resume its monetary easing cycle in the near future. Although inflation didn't decrease, what justification does the Fed have to lower rates? Nevertheless, traders found this formal pretext sufficient when combined with broader fundamental factors.
As a result, the British pound is rising again, and the dollar is falling again. The latest break below the ascending trendline proved irrelevant—the pair only made a slight correction and is now poised to resume its four-month uptrend.
On the 5-minute chart, the signals were nearly identical to those seen in the EUR/USD pair. First, a false sell signal near the Senkou Span B line, then two reinforcing buy signals near the same line and the 1.3489 level. In just half an hour, the pair soared to the Kijun-sen line and rebounded from it, which provided an opportunity to close long positions. The bounce from Senkou Span B allowed for short positions to be opened, but the price didn't reach the target area, so it returned to Senkou Span B, making that sell trade unlikely to be profitable.
COT Report
The COT reports for the British pound show that commercial traders' sentiment has constantly changed in recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, constantly cross and are usually near the zero mark. They are currently close to each other, indicating a roughly equal number of buy and sell positions. However, the net position has been increasing over the last year and a half.
The dollar continues to fall due to Donald Trump's policies, so market makers' demand for the pound sterling is not very important at the moment. If de-escalation of the global trade war resumes, the U.S. dollar will have a chance for some strengthening. According to the latest COT report on the pound, the "Non-commercial" group opened 1,300 BUY contracts and 1,400 SELL contracts. Thus, the net position of non-commercial traders barely changed for the reporting week.
Recently, the pound has risen significantly, but it's important to note that there's only one reason: Trump's policy. Once that factor is neutralized, the dollar could rise, but no one knows when that will happen. The pound itself has no fundamental reasons for growth. Nevertheless, traders are more than satisfied with the "Trump factor" when making trading decisions.
GBP/USD 1-Hour Analysis
In the hourly timeframe, GBP/USD maintains its bullish trend despite breaking below both the ascending channel and the upward trendline. The U.S. dollar merely corrected slightly, while the market is again focused on buying the pound and selling the dollar. As mentioned earlier, a sideways range is visible on the 4-hour chart, where the price still resides, while the daily chart shows a strong uptrend. Hence, there were no technical grounds for a substantial decline. However, the fundamental background—especially tied to Trump—continues to exert bearish pressure on the dollar.
For June 12, we highlight the following important levels: 1.2981-1.2987, 1.3050, 1.3125, 1.3212, 1.3288, 1.3358, 1.3439, 1.3489, 1.3537, 1.3637-1.3667, 1.3741. Senkou Span B (1.3489) and Kijun-sen (1.3535) lines can also be sources of signals. It is recommended to set Stop Loss to break even once the price moves 20 pips in the correct direction. Note that Ichimoku indicator lines may shift throughout the day, which should be considered when evaluating signals.
The UK will release its monthly GDP and industrial production data on Thursday. If the data deviates from forecasts, the market may react moderately. In the U.S., the macroeconomic backdrop will be even weaker. The market will continue to focus on the unrest in the U.S. and Trump's measures to suppress 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.
