GBP/USD 5-Minute Analysis

The GBP/USD currency pair continued to correct downward following Monday's rally and against the broader uptrend. There was no reason to expect the kind of price action that ultimately unfolded on Monday, Tuesday, Wednesday, and Thursday. Thus, we maintain that the market trades according to its rules, expectations, and sentiment. For example, how can one explain the dollar's three-day rally when all U.S. macroeconomic data has disappointed—and today, the two most important reports of the week are also likely to fall short? One might assume a technical correction has begun, but in that case, why didn't it start earlier when the market was ignoring Powell's hawkish comments or decent economic figures at the time? There are far more questions now than answers.

From a technical standpoint, the pound may also be in a flat range—albeit with a bullish tilt. If that's the case, then GBP is now hovering near the lower boundary of its channel, meaning an upward move on Friday is possible. We believe that U.S. data will keep showing disappointing results—an inevitable outcome under Donald Trump's current policies. However, how the market will respond is entirely unpredictable.

Thursday's trading signals are again not worth reviewing. Traders ignored technical references throughout the day and paid no attention to the ISM Manufacturing PMI during the U.S. session, even though it dropped below the 50.0 threshold. The dollar kept rising as if nothing had happened. Well then, let's see what surprise the market brings today.

COT Report

COT Reports for the British Pound show that commercial traders' sentiment has been constantly changing in recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, frequently intersect and are mostly near the zero mark. Currently, they are close to each other again, indicating approximately equal numbers of long and short positions.

In the weekly timeframe, the price initially broke through the 1.3154 level, then overcame the trend line, returned to 1.3154, and broke through again. Breaking the trend line typically means a high probability of further pound decline. However, we see the dollar consistently falling due to Donald Trump. Thus, news about the Trade War could continue pushing the pound higher despite technical factors.

According to the latest COT report for the British pound, the "Non-commercial" group opened 8,300 BUY contracts and closed 5,700 SELL contracts. As a result, the net position of non-commercial traders increased by 14,000 contracts.

The fundamental background still provides no reason for long-term pound purchases, and the currency itself realistically has chances for a continued global downward trend. Recently, the pound has risen significantly, but the reason remains the same – Donald Trump's policies.

GBP/USD 1-Hour Analysis

On the hourly chart, GBP/USD continues to follow an uptrend, although not as strongly as before, with occasional corrections. The pound sterling has shown extraordinary strength in recent months, but that strength is not due to any internal merits. The upward movement reflects the weakness of the dollar, provoked by Trump, and that trend isn't over yet. The market continues to ignore macroeconomic data, leaving chaos and inconsistency in its place. Logic and pattern are absent.

Key trading levels for May 2: 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. Ichimoku signals: Senkou Span B (1.3311) and Kijun-sen (1.3348) can also act as support/resistance or signal levels. Moving Stop Loss to breakeven once the price moves 20 pips in the intended direction is recommended. The Ichimoku lines may shift during the day, so they should be monitored for signal relevance.

On Friday, no important events or data releases are scheduled in the UK. However, the U.S. will publish its key reports — the unemployment rate and non-farm payrolls. If the market ignores them again, the dollar may continue to rise. But if it falls, that outcome will be much more logical, considering that the U.S. economy is beginning to slow, while Trump shows no intention of rolling back the tariffs he introduced.

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.