Analysis of GBP/USD 5M

The GBP/USD currency pair recovered 100 pips on Friday, with virtually no accompanying factors. There were no macroeconomic events scheduled in the UK that day, and in the U.S., only the University of Michigan consumer sentiment index was released. This index rose from 56.4 to 57.3, which was lower than anticipated. Thus, this report could have at least slightly strengthened the American currency, but the market again demonstrated that it reacts only to significant events.

Similarly, just as there could have been no rise for the pound on Friday, there could have been no decline on Wednesday and Thursday. Recall that the key factor behind the pound's decline in the middle of the week was the Bank of England meeting, the results of which are hardly "dovish." The "dovishness" was reflected in the Monetary Policy Committee's voting on the rate, as the policy easing received support from more members than traders expected. However, this had no impact—the rate remained unchanged. Thus, the British pound lost about 200 pips, not entirely deservedly.

From a technical perspective, a new downward trend is forming, supported by the trend line and the Ichimoku indicator lines. Until the price consolidates above these lines, expecting growth for the pound sterling may not be warranted.

On the 5-minute timeframe, one excellent trading signal for buying was formed on Friday. Just before the European trading session opened, the pair broke above the 1.3533-1.3548 range, and the price moved higher throughout the day. By the end of the day, the nearest target level, 1.3615, was reached, allowing traders to take profits.

COT Report

The COT reports for the British pound show that commercial traders' sentiment has been changing frequently in recent years. The red and blue lines reflecting the net positions of commercial and non-commercial traders frequently cross and are generally close to the zero mark. Currently, the lines are approaching each other, with non-commercial traders still dominating with a bearish sentiment. Recently, speculators have been actively building long positions, so a shift in sentiment may occur soon, though it is unlikely to have a significant impact on the GBP/USD pair.

The dollar continues to decline due to Donald Trump's policies, as shown on the weekly timeframe. The trade war will continue in one form or another for a long time, and the Fed will, in any case, lower rates in the next 12 months. Demand for the dollar will continue to fall. According to the latest COT report (dated February 3), the "Non-commercial" group opened 7,100 BUY contracts and 4,800 SELL contracts. Consequently, the net position of non-commercial traders increased by 2,300 contracts over the week.

In 2025, the pound has risen significantly, but it should be understood that there is but one reason—Donald Trump's policies. Once this reason is mitigated, the dollar could begin to appreciate. But when that will happen is anyone's guess.

Analysis of GBP/USD 1H

On the hourly timeframe, the GBP/USD pair continues to trend lower. A reversal back to an upward trend requires consolidation above the trendline and the Senkou Span B line. We still believe that, in the medium term, the pound sterling will rise amid a falling American currency. Thus, local upward trends have a higher priority than downward ones.

On February 9, we highlight the following important levels: 1.3201-1.3212, 1.3307, 1.3369-1.3377, 1.3437, 1.3533-1.3548, 1.3615, 1.3671-1.3681, 1.3751-1.3763, 1.3846-1.3886, and 1.3948. The Senkou Span B lines (1.3633) and Kijun-sen (1.3619) may also be sources of signals. It is recommended to set the Stop Loss level to breakeven when the price moves in the right direction by 20 pips. The Ichimoku indicator lines may shift during the day, which should be taken into account when determining trading signals.

On Monday, there are no significant reports scheduled in the UK or the U.S. Therefore, volatility may be low, and the price is unlikely to cross the area between the Senkou Span B and Kijun-sen lines, as well as the trend line.

Trading Recommendations:

On this day, traders may consider short positions targeting 1.3533-1.3548 if the price bounces from the area of 1.3615-1.3633. Long positions will become relevant with targets of 1.3671-1.3681 if the price surpasses the trend line.

Explanations for the Illustrations:

• Support and Resistance Levels: Thick red lines where the movement may end. They are not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extreme Levels: Thin red lines where the price previously bounced. They are sources of trading signals.
• Yellow Lines: Trend lines, trend channels, and any other technical patterns.
• Indicator 1 on COT Charts: The size of the net position for each category of traders.