GBP/USD 5-Minute Analysis

The GBP/USD currency pair remained flat with minimal volatility throughout Thursday. The current decline halted around the 1.3369 level, and the technical picture now suggests that the dollar's rise may be coming to an end. On Thursday, the British currency had every reason to continue falling, as the UK unemployment rate rose to 4.7%, and jobless claims exceeded forecasts. However, the day before, the market ignored a positive UK inflation report, and on Thursday, it also disregarded negative unemployment data. Meanwhile, on Wednesday, the U.S. inflation report — which wasn't even particularly significant — triggered a strong market reaction.

Currently, the market is operating under its own rules, with the macroeconomic backdrop once again having only a limited impact on trader sentiment. For the past three weeks, we've been observing a classic technical correction, which by now should have ended given the current fundamental landscape. Let us remind you that over the past two weeks, Donald Trump has raised several tariffs, so there is still no end in sight to the trade war.

From a technical standpoint, the downtrend on the hourly timeframe remains intact. If an uptrend begins from the 1.3369 level, the pair should return to the descending channel in the coming days and break through the Kijun-sen line. Otherwise, the pair is likely to stay in a flat phase or consolidate below 1.3369.

On the 5-minute chart, no trading signals were formed on Thursday. Only by the evening did the British pound manage to rise to the 1.3420 level. However, given the overall intraday movement and volatility, it was unlikely worth entering the market at that time.

COT Report

COT reports for the British pound show that in recent years, commercial traders' sentiment has changed constantly. The red and blue lines, representing the net positions of commercial and non-commercial traders, frequently cross and usually stay close to the zero line. Currently, they are also close to each other, indicating a roughly equal number of buy and sell positions. However, over the past 18 months, the net position has been growing and in recent months has been "bullish."

The dollar continues to decline due to Trump's policies, so for now, the demand from market makers for the British pound is not particularly important. The trade war will continue in some form for a long time. Demand for the dollar will decline in one way or another. According to the latest report on the British pound, the "Non-commercial" group opened 800 BUY contracts and closed 900 SELL contracts. Thus, the net position of non-commercial traders increased by 1,700 contracts over the reporting week, which is practically insignificant.

The pound rose significantly in 2025, but it should be understood that the reason was Trump's policies. Once that factor is neutralized, the dollar could start to strengthen—but no one knows when that will happen. The dollar is only at the beginning of a challenging period. There are still 3.5 years left of Trump's administration.

GBP/USD 1-Hour Analysis

On the hourly chart, the GBP/USD pair continues to move downward, as confirmed by the descending channel. Last week, the market largely ignored Trump's new tariffs and is continuing to do so this week. We believe these tariffs will eventually be factored in once the current technical correction is over. Therefore, at this time, short positions can be considered on technical grounds, but it's worth keeping in mind that the dollar still lacks medium-term bullish support.

For July 18, we highlight the following key levels: 1.3125, 1.3212, 1.3369, 1.3420, 1.3489, 1.3537, 1.3615, 1.3741–1.3763, 1.3833, 1.3886. The Senkou Span B line (1.3550) and the Kijun-sen line (1.3458) may also serve as signal indicators. A Stop Loss should be moved to breakeven once the price moves 20 pips in the correct direction. The Ichimoku indicator lines may shift during the day, which should be taken into account when identifying signals.

No major events or releases are scheduled in the UK on Friday, and only a few minor reports are expected in the U.S., among them the University of Michigan Consumer Sentiment Index. Therefore, we can expect low activity today. However, over the next 3.5 years, it is essential to remember that Trump can shake up the market at any moment.

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.