The GBP/USD currency pair also showed an upward movement on Monday. Before discussing the much-troubled dollar of 2025, it should be recalled that illogical moves in the market are possible and occur quite often. Market participants (market makers) trade not only to profit from exchange rate differences over time. They also execute transactions necessary for their operations. Therefore, the dollar can theoretically appreciate even when all the factors are against it. Logged.
Over the past two weeks, the U.S. dollar has experienced a notable rise. While we cannot say this move was illogical, there were certain grounds for strengthening the American currency, such as a strong GDP or Andrew Bailey's hints at another key rate cut before year-end. We believe the market interpreted much of the news in the dollar's favor, not entirely logically or fairly. However, GBP/USD also cannot move constantly in one direction. Hence, the correction we saw, and now the question is when and where it will end.
It must be acknowledged that Donald Trump is doing everything possible to expedite the correction as soon as possible. First, the U.S. president imposed new tariffs on imports covering all foreign-made trucks, furniture, and pharmaceuticals. Second, Trump cannot reach an agreement with Democrats on the budget for the next fiscal year, and on October 1, the U.S. may plunge into yet another "Trump shutdown." Third, Trump demanded that Iran hand over all of its enriched uranium. If this does not happen, another round of geopolitical conflict in the Middle East is possible. Fourth, Trump is pressuring the European Union to impose tariffs and sanctions against India and China as part of pressure on Russia.
As we can see, the U.S. dollar has numerous reasons to decline. One must simply remember that the currency market is like the Titanic in the Atlantic Ocean—it takes enormous effort and time to turn it around. Market makers may already realize that the dollar will continue to fall because there are no other options. However, they can prepare and accumulate short positions for months. During this time, the dollar may appear relatively stable, and retail traders may develop the false impression that the "2025 trend" has come to an end. In our view, the show is just getting started. Trump understands that he is already 78 years old and the presidential term is not infinite—especially if it is his last. He is in a great rush. This explains the radical decisions emerging from the White House. Therefore, in the next 3–3.5 years, we can expect many more events that will leave their mark on the currency market. For now, we are waiting for a change in the technical trend on the 4-hour timeframe to resume buying GBP/USD. Notably, the CCI indicator entered oversold territory during an uptrend, while the price failed to break the previous local low.
The average volatility of GBP/USD over the last five trading days is 89 pips. For the pound/dollar pair, this is considered "average." On Tuesday, September 30, we therefore expect movement within the range bounded by 1.3343 and 1.3521. The longer-term linear regression channel is pointing upward, indicating a clear bullish trend. The CCI indicator once again entered oversold territory, signaling a possible resumption of the uptrend.
Nearest Support Levels:
- S1 – 1.3428
- S2 – 1.3367
- S3 – 1.3306
Nearest Resistance Levels:
- R1 – 1.3489
- R2 – 1.3550
- R3 – 1.3611
Trading Recommendations:
The GBP/USD currency pair is once again correcting, but its long-term prospects remain unchanged. Trump's policies will continue to pressure the dollar, so we do not expect any sustained growth of the U.S. currency. Thus, long positions with targets at 1.3672 and 1.3733 remain much more relevant as long as the price is above the moving average. If the price is below the moving average line, small shorts with targets at 1.3367 and 1.3343 can be considered on technical grounds. From time to time, the U.S. currency shows corrections (as now), but for a trend reversal and sustained strengthening it needs real signs of the trade war ending or other global, positive factors.
Chart Elements Explained:
- Linear regression channels help determine the current trend. If both channels point in the same direction, the trend is strong.
- The moving average line (settings 20,0, smoothed) indicates the short-term trend and trade direction.
- Murray levels serve as target levels for moves and corrections.
- Volatility levels (red lines) are the likely price channel for the next day, based on current volatility readings.
- The CCI indicator: dips below -250 (oversold) or rises above +250 (overbought) mean a trend reversal may be near.
