GBP/USD 5-Minute Analysis

The GBP/USD currency pair continued its downward movement throughout Thursday, although by that point, there were no longer any solid reasons for it. The British pound, like the euro, had been rising against the U.S. dollar for an extended period, but now it seems to have overdone it. Over the past seven days, the British currency has been falling aggressively, even without fundamental or macroeconomic grounds. We still believe that the fate of the pound will be decided around the Senkou Span B line on the daily time frame. If a rebound occurs, the uptrend that began in January 2025 will remain intact. If this level is breached, the pound could quickly lose much of the advantage it has built up over the last six months.

Yesterday (as throughout the entire current week), there were no noteworthy events in the UK. In the U.S., a few secondary reports were published, such as the PCE index and personal income/spending figures for American consumers. Today, everything will depend on U.S. labor market data, unemployment data, and the ISM Manufacturing PMI. The British pound may continue its decline today as well.

As for trading signals, we can only highlight the first two around the 1.3212 level. First, the price rebounded from this level and moved up about 20 pips. Then it broke below it and moved down about 20 pips. Thus, traders could have opened positions on both signals, but both would have closed at breakeven with Stop Loss. All subsequent signals around this level (and there were no others) should have been ignored.

COT Report

COT reports for the British pound show that commercial trader sentiment has constantly shifted over recent years. The red and blue lines — representing net positions of commercial and non-commercial traders — frequently cross and generally stay near the zero mark. Once again, they've practically merged, indicating an almost equal number of buy and sell positions.

The dollar continues to weaken due to Donald Trump's policies, so demand from market makers for the British pound is currently of little importance. The trade war is likely to persist in one form or another for an extended period, resulting in a sustained decline in demand for the dollar. According to the latest report on the British pound, the "Non-commercial" group closed 7,000 BUY contracts and opened 21,400 SELL contracts. As a result, the net position of non-commercial traders fell by 29,400 contracts over the reporting week.

In 2025, the pound has risen significantly, but the reason is singular: the policies of Trump. Once that factor is neutralized, the dollar may begin to rise again, but no one knows when that will happen. It doesn't matter how quickly the pound's net position is growing — the dollar's is typically declining at a faster rate.

GBP/USD 1-Hour Analysis

In the hourly time frame, the GBP/USD pair is not yet ready for a new upward trend. The price easily broke through the Ichimoku indicator lines, so the trend has turned downward again. We still do not believe that the dollar will strengthen for a long time or significantly, but traders should not worry about our reservations. Instead, they should trade based on technical levels while keeping in mind that there are indeed short-term reasons for the dollar to rise this week, though a sustained trend would require solid fundamental backing.

For August 1, we highlight the following key levels: 1.3125, 1.3212, 1.3369-1.3377, 1.3420, 1.3509, 1.3615, 1.3681, 1.3763, 1.3833, 1.3886. The Senkou Span B line at 1.3472 and the Kijun-sen line at 1.3317 can also serve as sources of trading signals. It is recommended to set the Stop Loss level to break-even once the price moves 20 pips in the correct direction. The Ichimoku indicator lines may shift during the day, so this should be considered when determining signals.

On Friday, the UK calendar is once again empty, while in the U.S., key reports will be released, including the ISM Manufacturing PMI, NonFarm Payrolls, and the unemployment rate. This means that a new storm could hit the currency market in the second half of the day.

Trading Recommendations

We believe that on Thursday, the pair could very well continue its downward movement, but everything will depend on the nature of the U.S. macroeconomic data. The 1.3212 level did not perform well yesterday, but it should still be monitored today when looking for trading signals.

Illustration Explanations:

• Support and resistance price levels – thick red lines where movement may end. They are not trading signal sources.
• Kijun-sen and Senkou Span B lines—These are strong Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour one.
• Extremum levels – thin red lines where the price has previously rebounded. These act as trading signal sources.
• Yellow lines – trend lines, trend channels, and other technical patterns.
• COT Indicator 1 on the charts – the size of the net position for each category of traders.