GBP/USD 5M Analysis
On Tuesday, GBP/USD spent the entire day in a clear flat, which was visible on any timeframe. Unlike EUR/USD, which has been falling for two consecutive days, this behavior seemed logical, considering that there were no significant events or macroeconomic reports out of the UK or the U.S. on that day. From a technical standpoint, everything remains consistent as well. The pair initiated a new bullish trend structure, followed by a modest correction. At the time of writing, the price remains above the Senkou Span B line, which supports a continuation of the bullish sentiment. In our view, the rise of the British pound should resume regardless, as the global fundamental backdrop does not suggest a reversal.
Today, the UK is set to release one of the most important reports of the week—consumer inflation data. It's difficult to predict how the market will react, given that inflation in the UK is already well above the target level. A further rise in inflation would likely eliminate any possibility of the Bank of England easing monetary policy through the end of the year, which could support the pound.
On the 5-minute chart, trading signals were irrelevant on Tuesday. The pair moved in a narrow sideways channel between the Senkou Span B and Kijun-sen lines, with the levels 1.3369 and 1.3377 squeezed in between. As soon as the price moved away from one level, it immediately collided with another, leaving no room for clean entries.
COT Report
COT data for the British pound shows that the sentiment among commercial traders has been constantly changing in recent years. The red and blue lines, which display the net positions of commercial and non-commercial traders, frequently intersect and mostly hover near the zero line. Currently, they are close to equal, reflecting a balanced number of long and short positions.
The U.S. dollar continues to weaken due to Donald Trump's policies, so demand for the British pound among market makers is not currently a major factor driving the market. The trade war is expected to continue in one form or another for an extended period. Meanwhile, the Federal Reserve is expected to cut rates further in the coming year. Dollar demand is likely to keep decreasing as a result. According to the latest report on the pound, the "Non-commercial" group opened 3,700 long contracts and closed 900 short ones, increasing their net long position by 4,600 contracts for the week.
In 2025, the pound has posted significant gains—entirely due to Trump's economic and trade policies. Once that influence fades, a dollar rebound may begin, but no one knows precisely when that might happen. It no longer matters how quickly net positions for the pound are rising or falling—what matters is that net dollar positioning continues to decline, often at a faster rate.
GBP/USD 1H Analysis
On the hourly chart, GBP/USD has finally ended its downtrend and started a new upward cycle. The U.S. dollar still lacks any meaningful global support for strengthening, so we expect the pair to continue growing toward its 2025 highs under most scenarios. The only issue remains the long-running flat trend still visible on the daily chart. However, it's already clear that Trump's trade war is escalating again, market tensions are rising, and the Fed remains firmly in easing mode—a toxic combination for the USD.
For October 22, the following key levels are noted for trading: 1.3125, 1.3212, 1.3307, 1.3369–1.3377, 1.3420, 1.3533–1.3548, 1.3584, 1.3681, 1.3763, 1.3833, 1.3886. The Senkou Span B line (1.3368) and the Kijun-sen line (1.3404) can also generate signals during the day. It is recommended to move the Stop Loss to breakeven once the price moves 20 pips in the correct direction. Ichimoku lines may shift throughout the day, so they should be monitored in real time for accurate signal confirmation.
On Wednesday, the UK will publish one of this week's few key macroeconomic reports—inflation data—which could stir a significant market reaction. The U.S. calendar again remains empty.
Trading Recommendations:
Today, traders may initiate trades from the 1.3369–1.3377 area or from the Senkou Span B line. The British pound has started an upward trend, so we expect that momentum to continue in the near term with targets at 1.3533–1.3548. A consolidation below the Senkou Span B line could open the way for small, short-term short positions.
Explanation of Chart Elements:
- Support and resistance levels – thick red lines where price movement may pause or reverse; not direct trade signals
- Kijun-sen and Senkou Span B – Ichimoku indicator lines transferred from the 4H to the 1H timeframe; they are considered strong levels
- Extremes – thin red lines where price has previously reversed; they may act as trade triggers
- Yellow lines – trendlines, channels, or other technical formations
- COT Indicator 1 – net position size of each trader category
