Analysis of GBP/USD 5M

On Thursday, the GBP/USD currency pair once again showed no desire to move in any clear direction. After a relatively eventful Wednesday, when a fairly impactful inflation report was published in the UK, Thursday brought no significant data releases. As a result, the British pound returned to its usual low-volatility movements with a downward bias.

It is worth noting that, just like the euro, the pound sterling currently has no underlying reasons for a decline. However, on the daily time frame, a flat trend persists, so on lower time frames, we continue to observe illogical movements in the complete absence of fundamental and macroeconomic events.

From a technical perspective, it is more justified to consider the emergence of a new downtrend rather than the opposite. Over a week ago, a descending trendline was broken, providing the market with a great opportunity to initiate buying, fully supported by fundamentals and macroeconomic indicators. But instead of a logical rise, a week-long decline was observed, and now the price is located below the Ichimoku indicator lines. The movements are illogical, the technical picture is not holding up, and there is no news or data.

On the 5-minute time frame, a sell signal in the form of a bounce from the area of 1.3369–1.3377 and the Senkou Span B line was formed back on Wednesday evening. Those who entered short positions based on this signal could have made a decent profit, even amid total flat trading. Practically a full day later, during the American trading session, the price reached the nearest target level of 1.3307. A bounce from this level (which also occurred quite late in the evening) potentially offered an opportunity to consider long positions.

COT Report

COT reports on the British pound show that over the past few years, commercial traders' sentiment has been constantly changing. The red and blue lines, which represent the net positions of commercial and non-commercial traders, constantly cross and, for the most part, remain near the zero mark. This again illustrates that the number of long and short positions is roughly balanced.

The US dollar continues to weaken due to Donald Trump's policies. So, in principle, the demand from market makers for the British pound is not highly significant at the moment. The trade war will likely continue in one form or another for a long time. The Federal Reserve will lower interest rates regardless in the coming year. Thus, demand for the dollar will continue to decline.

According to the latest COT report on the British pound, the "Non-commercial" group opened 3,700 BUY contracts and closed 900 SELL contracts. As a result, the net position of non-commercial traders increased by 4,600 contracts over the week.

In 2025, the pound rose significantly, but it's essential to understand that this rise had a single cause—Trump's policies. Once this factor is neutralized, the dollar could start to strengthen. However, no one knows precisely when that might happen. It doesn't matter whether the net position of the pound changes fast or slowly. The net position on the dollar is falling more quickly and consistently, in any case.

Analysis of GBP/USD 1H

On the hourly time frame, the GBP/USD pair has finally completed its downtrend and has started a new upward trend. The US dollar still lacks fundamental reasons to strengthen, so we expect the pair to rise toward the 2025 highs under most circumstances. The key prerequisite is that the flat trend on the daily time frame does not persist for several more months. Nevertheless, even now, we can see that Trump's trade war continues to escalate, tensions are rising, and the Fed is leaning only toward easing monetary policy—an explosive mix for the US dollar.

For October 24, we highlight the following key levels: 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 (1.3358) and the Kijun-sen line (1.3373) can also serve as signal sources. A Stop Loss is recommended to be set at breakeven once the price moves 20 pips in the correct direction. The Ichimoku indicator lines may shift during the day, and this should be taken into account when determining trading signals.

On Friday, the UK and the US are scheduled to release PMI indices for the services and manufacturing sectors for October. Additionally, an important Consumer Price Index will be released in the US. Thus, volatility may be high today, although that doesn't necessarily mean price movements will become more logical.

Trade Recommendations:

Today, traders can once again consider trading from the 1.3307 level, which the price already bounced off yesterday. A bounce from this level provides an opportunity to trade upward with a target in the 1.3358–1.3377 area. A consolidation below the 1.3307 level will signal the relevance of new short positions, with a target at 1.3212.

Chart Legend:

Thick red lines represent resistance/support levels — they are not trade signals but indicate possible price pivots

Senkou Span B and Kijun-sen lines — from the Ichimoku indicator, adapted to the 1-hour chart from H4; these are strong dynamic levels

Thin red lines represent local extremums from which price previously reversed — they may serve as minor signal points

Yellow lines indicate trendlines, channels, or technical patterns

COT Indicator #1 — shows the size of net positions held by different trader groups