Analysis of GBP/USD 5M
The GBP/USD pair on Monday failed to show any meaningful moves. No drivers fueled a rally or another drop on the first trading day of the week, except for another series of statements from Donald Trump about imminent changes in the conflict with Iran. What those changes may be is unclear, and experience suggests little good is likely. No economic events or releases came out of the UK or the US, so Monday's low volatility was entirely predictable. The pound remains at the lows, and that low can be pierced at any moment. We see no signs of a meaningful correction or a market willingness to buy the pound. The only reason for the dollar's rise in recent weeks has been Federal Reserve tightening — a factor the market has worked through for the third time. Bank of England policy currently matters little to traders, though it may matter later, because the dollar cannot be supported forever by the same single factor. We remain constructive on the long-term pound uptrend, but GBP/USD has been flat for a year.
Technically, sterling continues forming a downtrend. At best, the pound can expect corrective moves within that downtrend. The dollar will not rise every day as it did on Wednesday evening, but right now we see no market desire to buy sterling.
On the 5-minute timeframe on Monday, one buy signal formed that produced neither profit nor loss. Price bounced during the European session from the 1.3369–1.3377 area but rallied only about 12 pips. By the end of the day, the price returned to its starting position, so traders would have closed either at breakeven or with a minimal loss. Volatility remains extremely low.
COT report
COT reports for the pound show that non-commercial traders have dominated the market with short positions for several months. The net position is negative despite the persistent long-term uptrend. Given events in the Middle East, it is unsurprising that dollar demand was high in the first half of 2026. The war is formally over, but the conflict persists. Only geopolitics can support the US dollar in the near term. However, until the pair closes below the trend line, we don't expect a strong, sustained decline.
In the long run, the dollar continues to weaken due to Trump's policies, as seen on the weekly timeframe. The trade war will continue in one form or another, and Trump's policy is aimed directly and indirectly at weakening the US currency. The long-term uptrend remains, as indicated by the trend line. Price recently tested that line and bounced off it. According to the latest COT report (dated September 15), the "Non-commercial" group closed 4,200 BUY contracts and 4,300 SELL contracts. Thus, the non-commercial traders' net position rose by 100 contracts over the week.
Analysis of GBP/USD 1H
On the hourly timeframe, GBP/USD continues to form a downward trend. The Fed's decision and tone have dramatically changed the outlook for the US dollar. For the second time this year, a "black swan" arrived in the market, delivering unexpectedly good news for the dollar. Therefore, it is now reasonable to doubt sterling's prospects for sustained gains.
For September 22 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 line (1.3450) and the Kijun-sen (1.3413) can also generate signals. It is recommended to move the Stop Loss to breakeven when the price moves 20 pips in the correct direction. The Ichimoku lines may shift during the day, which should be taken into account when determining trading signals.
No major events or releases are scheduled in the UK or the US today. Therefore, GBP/USD price action may again be very weak and plainly sideways during the day.
Trading recommendations:
Today traders may open short positions targeting 1.3301–1.3309 if price consolidates below the 1.3369–1.3377 area. Open long positions if price closes and holds above the 1.3369–1.3377 zone, targeting 1.3413 and 1.3450.
Explanations for Illustrations:
Support and resistance price levels are thick red lines where movement may conclude. They are not sources of trading signals.
The Kijun-sen and Senkou Span B lines are Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
Extreme levels are thin red lines from which the price has previously rebounded. They are sources of trading signals.
Yellow lines indicate trend lines, trending channels, and any other technical patterns.
Indicator 1 on COT charts shows the size of the net position of each category of traders.
