Analysis of GBP/USD 5M
The GBP/USD currency pair resumed its upward movement on Wednesday within a two-week ascending trend. Despite the lack of significant local reasons for the pound's growth, we consider it fully justified, as prior to this, the dollar had been rising for two consecutive months without any serious basis. Therefore, we are now witnessing a restoration of the fair value, and the British currency is not going to wait for the struggling euro. Last night, the minutes from the latest Federal Reserve meeting were published, and the meeting ended with a tightening of rhetoric and an almost explicit announcement of a rate hike by the end of the year. Thus, this minutes could, in theory, have supported the dollar, alongside geopolitical factors. However, instead of a dollar increase, we saw growth of the British currency. Why? Because geopolitical factors are currently being ignored, the future rate hike by the Fed is already priced in, and the GBP/USD pair continues to trade within a sideways channel on both the daily and weekly timeframes, moving from the lower boundary to the upper boundary and back.
From a technical standpoint, the British pound remains within an upward trend, clearly indicated by the trend line. The 1.3369-1.3377 area has been surpassed, allowing the British currency to continue building on its success. There will be very few important events this week, so traders can trade based on technical analysis, which they are doing. We believe that the upward movement, at least within the sideways channel on the daily timeframe, should continue.
On the 5-minute timeframe on Wednesday, five trading signals were generated. The price bounced twice from the area of 1.3369-1.3377, twice from the critical line, and once exceeded the area of 1.3369-1.3377. Out of all the signals formed, only the second bounce from 1.3369-1.3377 turned out to be false. The other trades were profitable, although volatility was once again not very strong. However, it was still higher than the euro's.
COT Report
COT reports for the British pound show that commercial traders' sentiment has been constantly changing in recent years. The red and blue lines representing the net positions of commercial and non-commercial traders frequently cross and are often close to the zero mark. Currently, the lines are moving apart, with non-commercial traders dominating... with sales. Given the events in the Middle East, it is not surprising that demand for risk currencies was weak in 2026. However, with the war over, there is no further reason to buy the dollar, and the pound sterling has not significantly declined in the long term despite low demand from professional players.
In the long term, the dollar will continue to decline due to Donald Trump's policies, as clearly seen on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time, and Trump's policy is aimed, both directly and indirectly, at weakening the American currency. The long-term upward trend remains, as indicated by the trend line. The price interacted with this line just last week and bounced off it. According to the latest COT report (dated June 30), the "Non-commercial" group closed 3,600 BUY contracts and 7,200 SELL contracts. Thus, the net position of non-commercial traders decreased by another 3,600 contracts over the week.
Analysis of GBP/USD 1H
On the hourly timeframe, the GBP/USD pair continues to form an upward trend. In the long term, the pound sterling still has no solid reasons to decline, while the US dollar has none to grow. The market has recently ignored most fundamental, geopolitical, and macroeconomic events, and on the daily timeframe, the pair is situated in the lower part of the sideways range. Therefore, we still expect upward movement.
For July 9, we highlight the following important levels: 1.3042-1.3050, 1.3096-1.3115, 1.3179-1.3187, 1.3301-1.3309, 1.3369-1.3377, 1.3465-1.3480, 1.3588, 1.3671-1.3681. The Senkou Span B (1.3260) and Kijun-sen (1.3364) lines may also be sources of signals. It is recommended to set the Stop Loss to break even when the price moves in the right direction by 20 pips. The Ichimoku indicator lines may move throughout the day, which should be accounted for when determining trading signals.
On Thursday, there are again no important events or publications scheduled in the UK, while secondary reports on unemployment claims and new home sales will be released in the US. Therefore, movements today will once again be technical.
Trading Recommendations:
Today, traders may open new short positions targeting the 1.3301-1.3309 area if the pair consolidates below 1.3364-1.3377. Long positions can be maintained after yesterday's breakout of the 1.3369-1.3377 area, with a target of 1.3465-1.3480.
Explanations for Illustrations:
Price levels of support and resistance (resistance/support) are thick red lines around which movement may terminate. They are not sources of trading signals.
The Kijun-sen and Senkou Span B lines are Ichimoku indicator lines carried over to the hourly timeframe from the 4-hour 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 represent trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts indicates the size of the net position of each category of traders.
