Analysis of GBP/USD 5M
The GBP/USD currency pair also continued to recover on Tuesday and, unlike the EUR/USD pair, changed its trend to upward. Overall, risk currencies continue to recover after the U.S. dollar's geopolitical dominance. However, as expected, the war in the Middle East has not been able to keep the American currency in the lead for long. The conflict has begun to fade, leading to a shift in traders' preferences.
We would like to remind you that the past month and a half have been "gloomy" for the British pound. Despite the complex economic and political situation in the U.S., almost every news report has been against the pound and in favor of the dollar. The data supporting the pair's growth has often been ignored by the market due to geopolitical factors. Thus, the war in the Middle East has become the final note in the suffering of the British currency. Now, it may not only shift into correction but also resume the upward trend of 2025.
From a technical standpoint, the price has consolidated above the Ichimoku indicator lines, so growth can now be expected, at least to the area of 1.3533-1.3548. The daily timeframe trend remains unchanged.
On the 5-minute timeframe yesterday, four trading signals were generated. All were buy signals, and all were around the 1.3437 level. Thus, traders had four opportunities to open long positions. Today, the British currency may continue to grow, but it is still essential to keep the inflation report in mind. And one should not think that the conflict in the Middle East cannot reignite with new force.
COT Report
COT reports on the British pound show that in recent years, the mood of commercial traders has been constantly changing. The red and blue lines, which represent the net positions of commercial and non-commercial traders, frequently cross and are mostly close to the zero mark. Currently, the lines are moving apart, with non-commercial traders still dominating on the sell side. Recently, speculators have aggressively increased their long positions, but they have not managed to enter the zone of their own superiority.
The dollar continues to decline due to Donald Trump's policies, as shown on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time, and the Fed will inevitably reduce rates over the next 12 months. Demand for the dollar will, one way or another, fall. According to the latest COT report (from March 3) on the British pound, the "Non-commercial" group closed 7,700 BUY contracts and opened 7,900 SELL contracts. Thus, the net position of non-commercial traders decreased by another 15,600 contracts over the week.
In 2025, the pound rose significantly, but it should be understood that the reason is one: Trump's policies. Once this reason is neutralized, the dollar may start to rise. But when that will happen—no one knows.
Analysis of GBP/USD 1H
On the hourly timeframe, the GBP/USD pair has long been able to shift to forming an upward trend, but geopolitics has dragged the pound sterling into the abyss. Despite the significant drop in the pair in February-March, we still regard it as a correction. The daily timeframe confidently signals the maintenance of the upward trend. Unfortunately, geopolitics is very unpredictable and can overshadow all other factors. However, in the near future, the pound sterling may hope for growth.
For March 11, we identify the following important levels: 1.3096-1.3115, 1.3201-1.3212, 1.3307, 1.3369-1.3377, 1.3437, 1.3533-1.3548, 1.3615, 1.3671-1.3681, 1.3751-1.3763. The Senkou Span B line (1.3412) and the Kijun-sen line (1.3382) may also be sources of signals. It is recommended to set the Stop Loss at breakeven when the price moves in the correct direction by 20 pips. The lines of the Ichimoku indicator may shift during the day, which should be taken into consideration when determining trading signals.
On Wednesday, there are again no significant events scheduled in the UK, but the U.S. will publish an inflation report that may provoke a market reaction. We do not believe the dollar will enter a new phase of growth if inflation accelerates, as that would not imply the Fed will maintain a "hawkish" stance. Recall that the labor market and unemployment data for February were abysmal.
Trading Recommendations:
Today, traders may open short positions with a target of 1.3307 if the pair consolidates below the Senkou Span B line. Long positions remain relevant with a target area of 1.3533-1.3548, as the Senkou Span B line and the 1.3437 level have been overcome.
Explanations for the Illustrations:
Price levels of support and resistance – thick red lines, around which the movement may end. They are not sources of trading signals.
The Kijun-sen and Senkou Span B lines are lines from the Ichimoku indicator transferred to the hourly timeframe from the 4-hour timeframe. They represent strong lines.
Extreme levels – thin red lines from which the price previously bounced. They are sources of trading signals.
Yellow lines – trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts – the size of the net position for each category of traders.
