Analysis GBP/USD 5M
The GBP/USD currency pair on Wednesday continued its upward correction, which ended with a telling rebound from the Senkou Span B line and the trendline. A clearer signal of the market's reluctance to buy the pound is hard to imagine. Although the market's "hawkish" expectations about Federal Reserve monetary policy weakened this week, core PCE inflation in the US did not rise, and the UK GDP report came in more positive than expected, we still did not see the British currency rise. What we are observing now is merely a banal retracement, which, as we see, has already ended. Of course, tomorrow the situation may change slightly because US unemployment reports and NFP will be released. But what will they change? The market continues to keep demand for the dollar high, even after John Williams said there is no need to raise rates in October. Of course, 11 other voting members are on the FOMC, but the Fed generally isn't set on prolonged, aggressive tightening. A September rate hike and one more by year-end have already been priced in about five times. The market has bought the dollar for the fourth week in a row.
Technically, the British pound continues to form a downward trend, as shown by the trendline and price below the Ichimoku indicator lines. Under current circumstances, the pound sterling can at most hope for a correction within the downtrend. Despite the absence of local factors for decline, the market currently shows no willingness to buy the British currency.
On the 5-minute TF, two trading signals were formed on Wednesday. As early as the start of the European session, price breached the critical line, allowing long positions to open. At the start of the American session, the 1.3301-1.3309 area was worked through with a rebound. Therefore, longs could be closed and short positions opened instead, which also proved profitable.
COT Report
COT reports for the pound show that non-commercial traders have dominated the market with sales for several months in a row. The net position is negative despite the preservation of an uptrend in the long term. Given events in the Middle East, it is unsurprising that dollar demand was quite high in the first half of 2026. The war has formally ended, but the conflict persists. The Fed's changed stance on monetary policy again supported the dollar, and the uptrend line was breached. However, it was breached in flat conditions, so we do not believe the uptrend is finished.
In the long term, the dollar continues to decline due to Donald Trump's policies, which is clearly visible on the weekly TF. The trade war will continue in one form or another for a long time, and Trump's policies aim directly and indirectly to weaken the US currency. The long-term uptrend remains intact. According to the latest COT report (dated September 22), the "Non-commercial" group closed 14,900 BUY contracts and opened 8,900 SELL contracts. Thus, non-commercial traders' net position increased by 23,800 contracts over the week.
Analysis GBP/USD 1H
On the hourly timeframe, the GBP/USD pair continues to form a downward trend. The Fed's decisions and stance have shifted significantly, changing prospects for the US dollar and the market's attitude toward it. We would say that, for the second time this year, a "black swan" has arrived in the market, bringing excellent news for the dollar when no one expected it. Thus, now one should doubt the rise of the British currency.
For October 1 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 (1.3304) and Kijun-sen (1.3256) lines can also be sources of signals. It is recommended to move the Stop Loss to breakeven when the price has moved 20 pips in the correct direction. The Ichimoku indicator lines may shift during the day, which should be considered when determining trading signals.
No important publications or events are scheduled today in the UK, while in the US the ISM manufacturing activity index and secondary initial jobless claims will be released. Thus, traders will mainly react to the ISM index today.
Brief summary of the above analysis:
Traders can consider the 1.3179-1.3187 area as a target for short positions if the price consolidates below the Kijun-sen line. A rebound of the price from the critical line would make the 1.3301-1.3309 area a target for long positions.
Explanations for the illustrations:
- Price support and resistance levels (resistance/support) — thick red lines around which movement may end. They are not sources of trading signals.
- Kijun-sen and Senkou Span B lines — Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
- Extreme levels — thin red lines from which the price previously bounced. They are sources of trading signals.
- Yellow lines — trendlines, trend channels, and any other technical patterns.
- Indicator 1 on the COT charts — the size of the net position of each trader category.
