Analysis of GBP/USD 5M
The GBP/USD currency pair rose sharply on Wednesday, though it also fell sharply during the day. Such "swings" were due to fundamental and macroeconomic backgrounds. First, a report on durable goods orders in the U.S. came out, beating expectations and strengthening the U.S. dollar. Shortly afterward, the UK's 2026 budget was announced, which could have led to another decline in the British pound, as taxes were increased contrary to the Labor Party's promises and Rachel Reeves's personal assurances. However, instead of a decline, we saw a rise. Why? Because the market had sold off the pound for two months based on questionable factors, it clearly priced in all the negativity at once. The dollar's time may have passed.
From a technical perspective, the pair bounced off the Ichimoku indicator lines and continued its upward movement. A new upward trend is forming, and the dollar is set for a difficult month in December. The American currency has clearly exhausted its reserve of luck and fortune, so we expect further declines.
On the 5-minute timeframe, the first trading signal was formed at the beginning of the U.S. trading session yesterday. The price perfectly bounced off the Senkou Span B and Kijun-sen lines, then rose and hit the level of 1.3212, where profits from long positions could have been taken. The profit amounted to at least 60 pips. It was also possible to trade a rebound from the level of 1.3212, but this signal turned out to be false, as the pair only fell 20 pips. Afterward, the price consolidated above 1.3212, but there is currently no confidence in the continuation of growth.
COT Report
The COT reports for the British pound show that sentiment among commercial traders has fluctuated in recent years. The red and blue lines, which reflect the net positions of commercial and non-commercial traders, frequently cross and are generally close to the zero mark. Currently, they are almost at the same level, indicating a roughly equal number of buy and sell positions.
The dollar continues to decline due to Donald Trump's policies, as shown clearly on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time. The Federal Reserve will likely lower rates over the next 12 months. Demand for the dollar will consequently decline. According to the last COT report (dated October 7) for the British pound, the "Non-commercial" group opened 13,900 BUY contracts and 9,400 SELL contracts. Thus, the net position of non-commercial traders increased by 4,500 contracts over the week. However, this data is already outdated, and no new data is available.
In 2025, the pound rose significantly, but it should be understood that there is only one reason: Donald Trump's policies. Once this reason is mitigated, the dollar may start to rise, but no one knows when that will happen. The rate of increase or decrease in the net position for the pound (if it decreases) is not significant. For the dollar, that rate is falling in any case and typically at a faster pace.
Analysis of GBP/USD 1H
On the hourly timeframe, the GBP/USD pair has started to form an upward trend after overcoming the Ichimoku indicator lines and trend resistance. The pound has also surpassed the significant level of 1.3212, which had blocked the price from moving higher for several weeks. In the upcoming weeks, we can expect the British pound to rise as the upward trend has now begun. We believe that medium-term growth will continue irrespective of the local macroeconomic and fundamental context, and that the correction on the daily timeframe will eventually come to an end.
For November 27, we identify the following important levels: 1.2863, 1.2981-1.2987, 1.3042-1.3050, 1.3096-1.3115, 1.3212, 1.3307, 1.3369-1.3377, 1.3420, 1.3533-1.3548, and 1.3584. The Senkou Span B line (1.3124) and Kijun-sen line (1.3125) can also provide trading signals. It is advisable to set the Stop Loss to breakeven when the price has moved 20 pips in the right direction. The Ichimoku indicator lines may shift throughout the day, which should be taken into account when determining trading signals.
On Thursday, no significant events or reports are scheduled in the UK or the U.S. Thus, volatility may decrease, but the British pound may continue to rise for technical reasons.
Trading Recommendations:
Today, traders can consider selling if the price consolidates below 1.3212, with a target at 1.3125. Long positions remain relevant above the level of 1.3212 with a target at the level of 1.3307.
Explanations for the Illustrations:
- Support and resistance price levels are indicated by thick red lines, where price movement may halt. They are not sources of trading signals.
- The Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator that are transferred from the 4-hour timeframe to the hourly timeframe. They are strong lines.
- Extremum levels are thin red lines from which the price has previously bounced. They are sources of trading signals.
- Yellow lines are trend lines, trend channels, and any other technical patterns.
- Indicator 1 on the COT charts represents the size of the net position of each category of traders.
