GBP/USD 5-Minute Chart Analysis
The GBP/USD currency pair opened on Tuesday with a sharp decline. This time, the market had legitimate reasons to sell the British pound: UK unemployment data and jobless claims came in well below expectations. Unemployment continues to rise, which on its own is negative for the economy. Beyond that, the Bank of England may consider restarting monetary easing due to weakness in the labor market. In short, Tuesday morning brought bad news for the pound.
In the second half of the day, Federal Reserve Chair Jerome Powell came to the pound's aid. It's still unknown what exactly Powell said, but demand for the U.S. dollar began to drop sharply during his remarks. Regardless, the pound should have been strengthening anyway, having broken the descending trendline on Monday. As it turned out, the pair broke out only to fall again. So far, sterling has had little luck, as the market continues to price in only dollar-supportive factors. We still interpret the current decline as illogical and expect the resumption of the 2025 uptrend.
On the 5-minute chart, there was an opportunity to open short positions early in the morning. The price rebounded from the Kijun-sen line and later broke through the 1.3307 level. However, bears failed to reach the nearest target at 1.3212. A reversal followed during the U.S. session, and the price quickly returned to 1.3307. As a result, any profit on the single trade would have required a manual close.
COT Report
Commitments of Traders (COT) reports on the British pound show that commercial traders' sentiment has constantly shifted in recent years. The red and blue lines representing net positions of commercial and non-commercial traders continually intersect and typically hover near the zero level. Currently, they are almost equal, indicating a balanced amount of long and short positions.
The U.S. dollar continues to weaken due to the policy of Donald Trump. Therefore, market makers' interest in sterling is currently of lesser importance. The trade war in one form or another will persist for a long time. The Fed will likely cut interest rates in the coming year. Demand for the U.S. dollar is expected to wane. According to the latest report, the "Non-commercial" group opened 3,700 long contracts and closed 900 short contracts. As a result, the net position increased by 4,600 contracts over the reporting week.
In 2025, the pound experienced significant growth, but the primary reason remains U.S. policy under Trump. Once that factor fades, the dollar may resume strengthening, though no one can say when that will happen. The pace at which the pound's net position grows or shrinks doesn't matter much—what matters is that the dollar's position continues to weaken, and often at a faster rate.
GBP/USD 1-Hour Chart Analysis
On the hourly timeframe, GBP/USD continues to show a downtrend despite having previously broken the trendline. This is another sign of the illogic behind the current movement. The U.S. dollar still lacks long-term reasons to strengthen, so we expect the uptrend that started in 2025 to resume eventually. Under current circumstances, a breakout above the trendline and above the Kijun-sen line is required to confirm a new upward movement.
For October 15, the following levels are important for trading: 1.3125, 1.3212, 1.3307, 1.3369–1.3377, 1.3420, 1.3533–1.3548, 1.3584, 1.3681, 1.3763, 1.3833, 1.3886. The Senkou Span B line (1.3424) and Kijun-sen line (1.3342) may also serve as sources of signals. It is recommended to move the Stop Loss to break-even once the price moves 20 pips in the correct direction. Remember, Ichimoku lines are dynamic and will shift throughout the day, which should be considered when identifying trade setups.
Wednesday is not expected to bring any major economic releases from either the UK or the U.S. As a result, traders will have little to react to—significantly lowering the chances for the pair to break through key technical lines and continue rising.
Trading Recommendations:
Today, traders can trade from the 1.3369-1.3377 range, from the 1.3307 level, or from the critical line. There are many levels and lines, but very few events today. A flat or simply low-volatility movement throughout the day is quite possible.Chart Legend:
- Support and resistance levels (thick red lines): Potential reversal zones, but not standalone trade signals.
- Kijun-sen and Senkou Span B lines: Transposed Ichimoku indicator lines from the 4-hour chart to the hourly chart. Considered strong technical levels.
- Swing highs/lows (thin red lines): Previous reaction levels that may serve as trade signals.
- Yellow lines: Trendlines, channels, and other technical patterns.
- COT Chart Indicator 1: Represents net positions across trader categories.
