GBP/USD 5M Analysis

The GBP/USD currency pair was trading lower on Wednesday and left the sideways channel of 1.3096-1.3212. The price also crossed below the Senkou Span B line, raising concerns that this is not just a coincidence but could indicate a trend. The British pound has once again demonstrated unprecedented weakness. For over a week, during the breakdown of a downward trend, it traded within a sideways channel, showing no desire to resume rising. It appears that the pair's decline yesterday was not due to macroeconomic factors, but instead because the bears grew tired of the bulls' passivity.

The macroeconomic backdrop favored the British pound's decline yesterday. The UK inflation report showed a slowdown in both headline and core inflation. However, it is essential to note that the actual values of both indicators matched the forecasts perfectly. The market was prepared for these values, and we once again find ourselves in a situation where the British pound did not deserve to fall, yet it did.

On the 5-minute timeframe, traders could open two trades yesterday. Initially, the pair bounced off the lower boundary of the sideways channel, but the signal proved false. A sharp decline in quotes began during the U.S. trading session with the sole objective of exiting the sideways channel. As soon as this task was accomplished, the decline essentially stopped, resembling manipulation. The second sell signal, however, proved conditionally profitable and partially offset the loss from the first trade.

COT Report

COT reports for the British pound show that commercial traders' sentiment has been changing constantly in recent years. The red and blue lines representing the net positions of commercial and non-commercial traders frequently cross each other and are mostly near the zero mark. Currently, they are at almost the same level, indicating approximately equal amounts of long and short positions.

The dollar continues to decline due to Donald Trump's policies, so market makers' demand for sterling is not particularly significant at the moment. The trade war will continue in one form or another for a long time. The Fed will, in any case, lower rates in the coming year, leading to a decline in dollar demand in one way or another. According to the latest report (dated September 23) on the British pound, the "Non-commercial" group opened 3,700 BUY contracts and closed 900 SELL contracts. Thus, the net position of non-commercial traders increased by 4,600 contracts over the week. However, this data is already outdated, and there are no new reports.

In 2025, the pound rose significantly, but one must understand that this was due to Donald Trump's policies. Once this reason is mitigated, the dollar may begin to rise, but when this will happen is anyone's guess. It does not matter how fast the net position for the pound is increasing or decreasing. The net position for the dollar is declining in any case, and it is generally declining faster.

GBP/USD 1H Analysis

On the hourly timeframe, the GBP/USD pair has finally broken through the trend line and crossed below the Senkou Span B line. As it turns out, this was only temporary and served to first enter a consolidation phase and then resume the decline. In the coming weeks, a continuation of the British pound's rise can be expected, but this requires the flow of uncontrolled negativity from the UK to cease. We believe that medium-term growth will continue regardless of the local macroeconomic and fundamental backdrop, but to sustain it, the price must overcome the Ichimoku indicator line.

For November 20, the following significant levels are highlighted for trading: 1.2863, 1.2981-1.2987, 1.3050, 1.3096-1.3115, 1.3212, 1.3307, 1.3369-1.3377, 1.3420, 1.3533-1.3548, and 1.3584. The Senkou Span B line (1.3098) and Kijun-sen line (1.3139) may also provide trading signals. It is recommended to set a Stop Loss at breakeven once the price has moved in the correct direction by 20 pips. The lines of the Ichimoku indicator may move throughout the day, which should be considered when determining trading signals.

On Thursday, important reports on the labor market and unemployment for September are scheduled to be released in the U.S. Therefore, if the GBP/USD pair declines another 100 pips during a formal exceeding of the forecast for Non-Farms, it would not be surprising.

Trading Recommendations:

Today, traders may consider selling if the price remains below the Senkou Span B line, targeting 1.3050 and 1.2987. Long positions will become relevant if the price consolidates above the Senkou Span B line, with targets at the Kijun-sen line and the 1.3212 level.

Explanations for Illustrations:

• Support and resistance price levels are shown as thick red lines, near which the movement may end. They are not sources of trading signals.
• Kijun-sen and Senkou Span B lines are lines from the Ichimoku indicator transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extreme levels are thin red lines from which the price previously bounced. They are sources of trading signals.
• Yellow lines are trend lines, trend channels, and any other technical patterns.
• Indicator 1 on COT charts represents the size of each category of traders' net position.