GBP/USD 5-Minute Analysis
On Tuesday, the GBP/USD pair crashed for the same inexplicable reasons as the EUR/USD pair. The only difference is that the euro lost about 100 points, while the pound lost 200. Even if there are objective reasons for the fall in the British currency, is there reason to expect further strengthening of the US dollar? In our view, no. The pound could still fall a bit if the US macroeconomic background this week is strong, but the overall fundamental backdrop will not change because of a few individual reports. Thus, we still expect only upward movement.
Of course, in the short term, you can absolutely trade to the downside. One thing we would like to point out, however, is that moves like Tuesday's should be avoided. They may look extremely attractive, but even in hindsight, they are very hard to explain. Just look at the illustration below: for two weeks, the pound was moving very sluggishly, but every trade entered did not and could not result in huge losses. If traders went long on Tuesday (for which there were reasons) and forgot to set a Stop Loss, they suffered huge losses by the end of the day. And trying to chase such a move is certainly not the best idea.
On the 5-minute chart, we highlighted all of the signals from the past day, but there was no sense in trading any of them. What we saw was emotional trading, where neither levels nor lines held much significance. Yes, the 1.3369-1.3377 area held the pair from further fall, but by that time, the move itself was essentially over. From our point of view, you should only trade clear and calm moves—or at least those that are predictable. For example, an hour before the Fed results are announced, you can expect volatility to increase.
COT Report
COT reports for the British pound indicate that over recent years, the sentiment of commercial traders has shifted constantly. The red and blue lines, reflecting net positions of commercial and non-commercial traders, frequently cross and usually close to zero. Currently, they're almost level, indicating a nearly equal number of buy and sell positions.
The dollar continues to weaken due to Trump's policy, so market makers' demand for sterling is not particularly important right now. The trade war is likely to persist in some form for an extended period. The Federal Reserve will be forced to cut rates at some point in the coming year. Demand for the dollar will decline anyway. According to the latest report on the pound, the "Non-commercial" group closed 5,300 BUY contracts and opened 800 SELL contracts. Thus, the net position of non-commercial traders shrank by 6,100 contracts over the reporting week.
In 2025, the pound strengthened greatly, but this was for one reason: Trump's policy. As soon as this is neutralized, the dollar could resume rising—but no one knows when that will happen. It doesn't matter how fast the net position of the pound rises or falls. For the dollar, it continues to decline, usually at a faster pace.
GBP/USD 1-Hour Analysis
On the hourly timeframe, GBP/USD is ready to form a new uptrend, but Tuesday's trading ruined the entire technical picture. In our view, the pair has corrected sufficiently in recent weeks to resume the global upward trend that began back in January. The fundamental and macroeconomic background hasn't changed lately, so there's still no reason to expect dollar strength. However, the pound sterling is currently collapsing, making it extremely difficult to explain such a move.
For September 3, we highlight the following key levels: 1.3125, 1.3212, 1.3369-1.3377, 1.3420, 1.3509-1.3525, 1.3615, 1.3681, 1.3763, 1.3833, 1.3886. The Senkou Span B (1.3482) and Kijun-sen (1.3443) lines may also serve as signals. It is recommended to move your Stop Loss to break even once the price moves 20 pips in the right direction. Ichimoku indicator lines may move during the day, which should be taken into account for trading signals.
On Wednesday, there are again no important events scheduled in the UK, but the US will publish the JOLTS job openings report for July. We do not consider this a super-important report, but it could provoke some market reaction. On Wednesday, the key point is whether the market has calmed down after Tuesday. That's what really matters.
Trading Recommendations
We believe that on Wednesday, the pound may attempt a new rise from the 1.3369-1.3377 area. If the pair consolidates below this area, short positions can be considered targeting 1.3212. The main thing today is for movements to be normal and calm.
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.
- Indicator 1 on the COT charts – the size of the net position for each category of traders.
