GBP/USD 5-Minute Analysis
On Monday, the GBP/USD currency pair declined slightly, but this was enough for another test of the ascending trendline. In principle, the British currency has been rising for more than two weeks straight, so a minor correction is not an issue. We are not opposed to the price consolidating below the trendline, but we will not assume that this marks the end of the dollar's decline (even a local one). The U.S. currency still lacks any fundamental support. Therefore, while local technical corrections are possible, a more significant move is not.
Essentially, both major currency pairs have now tested their respective trendlines. Thus, they are likely to continue showing almost identical dynamics. On Monday, the macroeconomic background was absent, but in the evening (or even at night), negotiations between Donald Trump and leaders of the EU and Ukraine were scheduled. These talks could either bring an end to the military conflict between Ukraine and Russia or extend it for many years ahead. Therefore, as soon as information starts coming in, traders should be prepared for market volatility.
In the 5-minute timeframe, the situation for the British pound was almost identical to that of the euro. By evening, the price declined to the support level of 1.3509 and the critical line. A rebound from these supports would push the pound into a new upward move. A breakout would lead to a continuation of the correction.
COT Report
COT reports on the British pound show that in recent years, the sentiment of commercial traders has constantly shifted. The red and blue lines, which represent the net positions of commercial and non-commercial traders, frequently intersect and, in most cases, remain near the zero mark. At present, they have nearly converged again, indicating a roughly equal number of long and short positions.
The dollar continues to decline due to Trump's policies, so the demand of market makers for the pound is not particularly important right now. The trade war will continue in one form or another for a long time. Dollar demand will continue to decline. According to the latest report on the British pound, the "non-commercial" group opened 8,100 BUY contracts and 13,900 SELL contracts. Thus, the net position of non-commercial traders declined by another 5,800 contracts during the reporting week.
In 2025, the pound rose sharply, but it should be understood that there is only one reason: Trump's policy. Once this factor is neutralized, the dollar could move into growth, but no one knows when that will happen. It does not matter much how fast the net position for the pound grows or falls. The dollar is falling regardless, usually at a faster pace.
GBP/USD 1-Hour Analysis
On the hourly timeframe, the GBP/USD pair continues to form an upward trend, and on the daily chart, it has bounced from the important and strong Senkou Span B line. From our perspective, the fundamental background remains unfavorable for the U.S. currency, so in the long term, we expect the continuation of the "2025 trend." Producer price inflation slightly brightened the dollar's gloomy backdrop, but the bears' momentum is unlikely to last long. The dollar may count on growth only within purely technical corrections.
For August 19, 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 (1.3306) and the Kijun-sen line (1.3505) may also serve as signal sources. A Stop Loss level is recommended to be set at breakeven once the price moves 20 pips in the right direction. The Ichimoku indicator lines may shift during the day, which should be considered when determining trading signals.
On Tuesday, no significant events are scheduled in the United Kingdom, while in the U.S., several secondary construction-sector reports will be released. Of course, these reports may trigger some reaction, but we do not particularly expect it. This week will bring few news events, but at the same time, meetings currently taking place at the White House could change the future of Europe.
Trading Recommendations
We believe that on Tuesday, the pair may resume growth. For this, a rebound from the 1.3509 level, the Kijun-sen line, or the trendline is needed. The target for long positions is 1.3615. To consider short positions, the price must consolidate below the trendline. The target, in this case, is 1.3420.
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.
