GBP/USD 5-Minute Analysis

On Wednesday, the GBP/USD currency pair continued trading with an upward bias for some time, but it resumed its decline in the afternoon. From our perspective, the U.S. dollar has weakened significantly in recent months, and now that the global trade war appears to be heading toward resolution- or at least stabilization- it would be logical to expect a strengthening of the American currency. However, Tuesday demonstrated that the market is still reluctant to buy the dollar. There is no confidence that Trump won't introduce new tariffs or start a new trade war tomorrow. As a result, on major news such as the reduction of tariffs with China, the dollar gains 140 pips, but on a minor decline in U.S. inflation, which essentially means nothing (since the Federal Reserve still does not intend to ease policy any time soon), the dollar drops 170 pips.

From a technical standpoint, the pair corrected toward the Senkou Span B line and bounced off it. Therefore, a resumption of the downward movement is possible. However, the last round of the pair's decline was driven by specific events: the Fed meeting, the Bank of England meeting, the signing of a trade deal between the UK and the U.S., and the reduction of tariffs between China and the U.S. The question is whether traders will want to buy the dollar again if there are no major dollar-positive developments in the near term.

In the 5-minute time frame, the pair showed very clean technical movements yesterday. First, it rebounded almost precisely from the 1.3288 level, then rose to the next target at the 1.3348–1.3358 area. After bouncing off this area, it fell back to 1.3288. This gave traders two opportunities to enter the market, and each trade ended in a profit of about 40–50 points.

COT Report

COT reports for the British pound show that commercial traders' sentiment has fluctuated frequently in recent years. The red and blue lines, representing net positions of commercial and non-commercial traders, cross regularly and typically remain near the zero line. They are again close to each other, indicating roughly equal numbers of long and short positions.

In the weekly timeframe, the price broke below the 1.3154 level, then broke a trend line, returned to 1.3154, and broke again. Breaking the trend line indicates a high probability that the pound will continue to fall. However, we see that the dollar keeps dropping due to Donald Trump. Therefore, the trade war news could continue pushing the pound higher despite technical factors.

According to the latest COT report on the British pound, the "Non-commercial" group opened 3,300 long contracts and closed 1,900 short contracts, increasing their net position by 5,200 contracts.

The fundamental backdrop still offers no justification for long-term purchases of the pound sterling, and the currency has real chances to resume a global downtrend. The pound has risen sharply recently, but we must remember that Donald Trump's policy is the sole reason. Once that factor is removed, the dollar may begin to strengthen.

GBP/USD 1-Hour Analysis

In the hourly time frame, GBP/USD finally broke out of the sideways channel and began a downward movement. However, it didn't last long. The continuation of the decline will depend entirely on Donald Trump and the unfolding situation in the global trade war. If tensions continue to ease and more trade deals are signed, the dollar could resume growth. However, it is important to note that the market still does not favor the U.S. dollar and lacks confidence in de-escalating the trade conflict.

For May 15, the following key levels are identified: 1.2691–1.2701, 1.2796–1.2816, 1.2863, 1.2981–1.2987, 1.3050, 1.3125, 1.3212, 1.3288, 1.3358, 1.3439, 1.3489, 1.3537. The Senkou Span B (1.3348) and Kijun-sen (1.3248) lines can also serve as sources of signals. A Stop Loss should be moved to breakeven once the price moves 20 pips in the desired direction. Ichimoku lines may shift throughout the day, so traders should remember this when identifying signals.

On Wednesday, the UK is set to publish second estimates of Q1 GDP and industrial production data. In the U.S., the most significant release will be retail sales. These reports are unlikely to provoke a strong market reaction but may trigger a modest one.

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.