GBP/USD 5-Minute Analysis

The GBP/USD pair sharply ended its downward correction and began forming a new uptrend. Naturally, such a steep drop in the U.S. dollar was linked to just one event—Jerome Powell's speech. For the first time in 2025, the Federal Reserve Chair allowed for a possible rate cut in September, which triggered a sharp sell-off of the U.S. dollar. However, let us remind you that Fed monetary policy is not even the main factor behind the dollar's decline in 2025. There are several other global reasons that we discuss almost daily.

From a technical standpoint, the picture is identical to that of the euro. Within just half an hour, the price broke through the trendline, the 1.3420 level, and the Ichimoku indicator lines. Thus, the trend instantly shifted upward. Of course, one should not expect the pound sterling to keep rising at the same pace, but most likely we are at the start of a new leg in the 2025 uptrend. At the very least, we still see no reason for the dollar to resume growth.

On the 5-minute timeframe, the pound also generated several signals on Friday, but there was no sense in trying to act on them. The first signal came during Powell's speech, when the price surged 60 pips in five minutes. The next signal came after breaking 1.3509 and the critical Kijun-sen line, but by then the movement had already begun to fade, with the market due to close in just a few hours. A potential long trade could not have resulted in a loss, but neither would it have brought meaningful profit.

COT Report

COT reports on the British pound show that in recent years, commercial traders' sentiment has been constantly shifting. The red and blue lines, reflecting the net positions of commercial and non-commercial traders, regularly cross and usually stay close to zero. At present, they are again almost at the same level, suggesting roughly equal long and short positions.

The dollar continues to weaken due to Donald Trump's policies, so demand for sterling among market makers is not particularly relevant now. The trade war will continue in one form or another for a long time. The Fed will cut rates at some point in the coming year. Dollar demand will fall regardless. According to the latest COT report on the British pound, the "Non-commercial" group opened 7,500 BUY contracts and closed 6,300 SELL contracts. As a result, the net position of non-commercial traders rose by 13,800 contracts for the reporting week.

In 2025, the pound has risen significantly, but it is important to understand that the reason is singular—Trump's policy. Once that factor fades, the dollar may strengthen, but no one knows when. It does not matter much how the pound's net position changes—dollar positioning is falling anyway, usually at a faster pace.

GBP/USD 1-Hour Analysis

In the hourly timeframe, GBP/USD is ready to form a new uptrend. Over the past week, the pair corrected enough to resume the global uptrend that began back in January. The fundamental and macroeconomic backdrop has not changed over the past week, so there is still no reason to expect dollar strength.

For August 25, we highlight the following important levels: 1.3125, 1.3212, 1.3369–1.3377, 1.3420, 1.3509, 1.3615, 1.3681, 1.3763, 1.3833, 1.3886. Senkou Span B (1.3436) and Kijun-sen (1.3469) can also act as sources of signals. It is recommended to set the Stop Loss to breakeven when the price moves 20 pips in the right direction. Ichimoku indicator lines may shift during the day, which should be considered when identifying trading signals.

On Monday, no macroeconomic reports or events are scheduled in either the UK or the U.S. There will be nothing to react to during the day. Volatility may return to the levels seen Monday–Thursday last week.

Trading Recommendations

We believe that on Monday upward movement may continue, though a correction would be more preferable. Breaking above the Kijun-sen line allows for opening longs, but on Monday, consolidation below 1.3509 would allow for expecting a decline as part of a pullback from Friday's rally.

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.