GBP/USD Analysis 5M

The GBP/USD currency pair traded disconnected entirely from reality, logic, fundamentals, and macroeconomics. First, it should be noted that there were no significant events in either the UK or the U.S. during the day. Nonetheless, one could have expected a new rise in the British pound for technical reasons. However, as the evening approached, the pound found no better option than to stabilize in an upward trend below the Kijun-sen line, thus resulting in yet another upward trend ending before it even began. Once again, we are witnessing the completely illogical growth of the dollar. It should be remembered that next week, there is a 90% probability the Federal Reserve will cut the key rate for the third consecutive time, while the only important report this week—the ISM Manufacturing Index—was weaker than forecasts. Nevertheless, this did not prevent the dollar from strengthening again. There remains no logic in these movements.

From a technical standpoint, the price may drop to the Senkou Span B line, while the upward trend remains valid. However, given the current volatility and movements, we advise traders to be extremely cautious with any positions. A consolidation above the 1.3201-1.3212 area could trigger a resumption of the upward trend.

On the 5-minute timeframe, the price settled below the critical line twice yesterday, allowing for short positions to be opened. In both instances, the price failed to move in the desired direction by even 20 pips. Theoretically, the decline could continue today toward the Senkou Span B line.

COT Report

COT reports on the British pound indicate that, in recent years, commercial traders' sentiment has been consistently changing. The red and blue lines displaying the net positions of commercial and non-commercial traders have been crossing frequently, often staying near the zero mark. Currently, they are at nearly the same level, which indicates a roughly equal number of long and short positions.

The dollar continues to weaken due to Donald Trump's policies, as clearly seen on the weekly timeframe. The trade war is likely to continue in one form or another for a long time. The Federal Reserve is set to lower rates in the next 12 months. Demand for the dollar will decline one way or another. According to the last COT report (as of October 14) regarding the British pound, the "Non-commercial" group closed 14,900 long contracts and 7,700 short contracts. Consequently, the net position of non-commercial traders decreased by 7,200 contracts over the week. However, this data is already outdated, and no fresh information is available.

In 2025, the pound significantly increased, but it should be understood that the reason is single – Donald Trump's policies. Once this reason is neutralized, the dollar may strengthen, but when that will happen remains uncertain. Regardless of how fast the net position of the pound rises or falls, the dollar's net position is decreasing, and usually at a faster pace.

GBP/USD Analysis 1H

On the hourly timeframe, the GBP/USD pair continues to form an upward trend after breaking through the Ichimoku indicator lines. However, this trend may end in the near future as the price crosses the Senkou Span B line. We believe that medium-term growth will continue regardless of the local macroeconomic and fundamental backdrop, and that the correction on the daily timeframe will end sooner or later. However, at the moment, we are once again seeing weak and illogical movements.

For December 3, we highlight the following important levels: 1.2863, 1.2981-1.2987, 1.3042-1.3050, 1.3096-1.3115, 1.3201-1.3212, 1.3307, 1.3369-1.3377, 1.3420, 1.3533-1.3548, 1.3584. The Senkou Span B line (1.3152) and the Kijun-sen line (1.3198) may also serve as sources of signals. It is recommended to set the stop-loss order to breakeven once the price moves 20 pips in the right direction. The Ichimoku indicator lines may shift during the day, which should be taken into account when determining trading signals.

On Wednesday, there are no significant events or macroeconomic reports scheduled in the UK, while reports on industrial production, the ADP report, and the ISM services activity index will be published in the U.S. We are not certain that these reports will provoke a logical market reaction.

Trading Recommendations:

Today, traders may consider selling since the price has settled below the critical line, with the target set at the Senkou Span B line. However, it should be remembered that there is currently no logic in the movements, and technical indicators are performing poorly. Long positions will become relevant upon consolidation above the 1.3201-1.3212 area, targeting 1.3267 and 1.3307.

Illustration Explanations:

• Support and Resistance Levels: Thick red lines where price movement may end. These are not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines projected onto the hourly timeframe from the 4-hour timeframe. These are strong lines.
• Extreme Levels: Thin red lines where the price previously rebounded. These are sources of trading signals.
• Yellow Lines: Trend lines, trend channels, and any other technical patterns.
• Indicator 1 on COT Charts: The size of the net position for each category of traders.