GBP/USD 5-Minute Analysis

The GBP/USD currency pair also continued its downward movement on Tuesday, though much more moderately compared to Monday or last week. The reasons for the pound's decline this week are similar to those driving the euro down. It is clear that the euro is mainly responsible for the decline of the British pound. At the same time, both currency pairs are undergoing downward corrections on higher timeframes. This week, the direction of movement will largely depend on fundamental and macroeconomic events, but eventually the market will return its focus to the trade war factor.

From a technical perspective, we are seeing a strong, uninterrupted decline in the British pound for four consecutive days. It's currently not possible to form a descending channel or draw a trendline, as there are virtually no significant highs or lows. Almost any upward pullback would result in a breakout of the trendline or exit from the channel, making them meaningless at the moment. It's also difficult to say a clear downtrend has formed, as it's hard to define its foundation or boundaries. We believe the best approach now is to keep in mind that the price is in a technical correction on the daily timeframe and to monitor this week's macroeconomic background closely.

No trading signals were generated during Tuesday's session—which may have been a good thing, as the price changed direction several times throughout the day. However, it's worth noting that we discussed the 1.3369 level yesterday. A breakout below it opened the path for the pound to move further downward.

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

On the hourly timeframe, the GBP/USD pair is not yet ready for a new bullish trend. The price easily broke below the Ichimoku indicator lines, so the trend has once again turned bearish. We still don't believe that the dollar will rise long or strongly. Traders shouldn't worry about our broader concerns, but simply trade based on technical levels, bearing in mind that local reasons for dollar strength did emerge on Monday, but there are still a few reasons for a longer-term uptrend.

For July 30, we highlight the following key levels: 1.3125, 1.3212, 1.3369, 1.3420, 1.3509, 1.3615, 1.3681, 1.3763, 1.3833, 1.3886. The Senkou Span B line (1.3472) and the Kijun-sen line (1.3446) may also serve as signal sources. It is recommended to set the Stop Loss to break-even once the price moves 20 pips in the correct direction. The Ichimoku indicator lines can shift during the day, which should be taken into account when determining trading signals.

On Wednesday, the UK macro calendar is once again empty, while in the U.S., GDP, ADP, and the FOMC meeting results will be released. As such, the most important events are scheduled for the second half of the day, and a flat (sideways) market may be observed during the European session.

Trading Recommendations

We believe that the 1.3369 level will be the key reference point for Wednesday's trading. A confirmed break below it indicated that bears were intent on continuing to sell for some time—but further dollar strength now requires new data. A consolidation above the 1.3369 level would allow traders to open long positions with a target at 1.3420.

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.