GBP/USD 5-Minute Analysis
On Monday, the GBP/USD currency pair continued its upward movement, though it remained very weak. There was no macroeconomic or fundamental backdrop yesterday, so traders had nothing to focus on. Therefore, the low volatility is quite understandable, although we expected stronger moves and growth based on last week's events. However, the market decided to take a pause.
From a technical perspective, there's little to expect other than continued growth. On the daily timeframe, the pair bounced off the Senkou Span B line; on the hourly chart, it broke through the trendline; and on the 4-hour chart, it crossed the Kijun-sen line. Thus, the technical picture indicates a change in the short-term trend. Traders were unable to overcome the 1.3307 level on Monday, but it is not particularly strong. If today's U.S. ISM Services PMI comes in weak, there should be no problem breaking through that level.
Overall, we expect the British pound to behave similarly to the euro — that is, to rise. This week, the Bank of England is expected to cut the key rate, but we'd like to remind readers that the rate divergence factor between the Federal Reserve and the Bank of England has persisted throughout 2025. And it hasn't prevented the market from selling off the U.S. dollar for most of the year.
On the 5-minute chart, the Kijun-sen line fell to 1.3262 during Monday, which allowed two buy signals to be identified during the European session. As already mentioned, movement was very weak, but several dozen pips could still be earned from the long position — better than nothing.
COT Report
COT reports for the British pound show that in recent years, the sentiment of commercial traders has been constantly changing. The red and blue lines, which represent the net positions of commercial and non-commercial traders, frequently cross and are mainly near the zero mark. They've nearly converged again, indicating an approximately equal number of long and short positions.
The dollar continues to decline due to Donald Trump's policies, so, in principle, the market makers' demand for the pound sterling is currently not particularly significant. The trade war will continue in some form for quite a while. Demand for the dollar will continue to decline. According to the latest report on the British pound, the "Non-commercial" group closed 5,900 BUY contracts and opened 6,600 SELL contracts. Thus, the net position of non-commercial traders fell by 12,500 contracts over the reporting week.
In 2025, the pound rose significantly, but it's important to understand that there was one main reason: Trump's policies. Once that factor is neutralized, the dollar could begin to rise again, but no one knows when that will happen. It doesn't matter how fast the net position for the pound rises or falls. The dollar is falling regardless—and typically at a faster rate.
GBP/USD 1-Hour Analysis
On the hourly chart, the GBP/USD pair broke through the trendline, while on the daily timeframe, it has already bounced off the strong Senkou Span B line. Thus, the short-term trend has shifted to bullish. In our view, the fundamental backdrop still works against the U.S. dollar, so in the longer term, we expect a resumption of the "2025 trend."
For August 5, we highlight the following important levels: 1.3125, 1.3212, 1.3369–1.3377, 1.3420, 1.3509, 1.3615, 1.3681, 1.3763, 1.3833, 1.3886. The Senkou Span B line (1.3446) and the Kijun-sen line (1.3262) may also serve as signal sources. A Stop Loss should be placed at breakeven once the price moves 20 pips in the correct direction. The Ichimoku indicator lines may shift during the day, so this should be factored in when identifying trading signals.
On Tuesday, the UK will release the final Services PMI for July, which is expected to have virtually no market impact. The much more important report is the U.S. ISM Services PMI.
Trading Recommendations
We believe the pair may continue its upward movement on Tuesday, especially after confirming above the Kijun-sen line, which has served as a signal to open long positions targeting 1.3369–1.3377. The only thing left is for the price to break through the 1.3307 level to continue rising. Given Friday's developments, we would not recommend opening short positions.
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.
