GBP/USD 5-Minute Analysis
The GBP/USD currency pair showed lower volatility on Thursday than the EUR/USD pair, which is quite surprising. At the same time, the British pound recovered without much difficulty to the critical line, and for the same reasons, the European currency resumed its growth. There's no point in rehashing everything that happened yesterday in the U.S. Let's say that once again, the market did not believe Trump, nor the court, nor the rosy prospects for the American economy under Trump, nor at the end of the trade war. As a result, we saw another drop in the dollar, and the technical breakout of the price below the trend channel was overridden by the fundamental background and the very peculiar interpretation of it by traders.
However, as we mentioned in previous articles, even if the price consolidated below the ascending channel, it would be very difficult to believe in a strong dollar rally under the current circumstances. Yesterday, the price rebounded from the Senkou Span B line, particularly visible in the 4-hour timeframe. Thus, from our point of view, the upward trend is maintained, and the dollar still has very little chance of even a minor trend.
Trading signals on the 5-minute timeframe for the pound weren't as good as for the euro, but there was still an opportunity to make a profit. The first sell signal during the European session around the 1.3439 level was false, as the price couldn't move even 20 pips in the desired direction. The trade closed with a slight loss. Later, a correct buy signal appeared around the same level, and during the U.S. session, the price surpassed the critical line. Therefore, long positions could have been held throughout that time and closed manually in the evening. The profit from the second trade amounted to around 40-50 pips.
COT Report
COT reports on the British pound show that commercial trader sentiment has fluctuated constantly in recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, cross each other frequently and usually hover around the zero mark. They are close together again, indicating a roughly equal number of long and short positions. However, the net position has shown steady growth over the past year and a half.
The dollar continues to weaken due to Donald Trump's policies, so market makers' demand for the pound is not particularly important now. If a global trade war de-escalation resumes, the U.S. dollar may have an opportunity to strengthen — but that opportunity still needs to be seized.
According to the latest report on the British pound, the "Non-commercial" group closed 1,400 long contracts and opened 1,800 short contracts, resulting in a 3,200 decrease in the net long position.
The pound has surged significantly recently, but it's important to understand that the only reason is Trump's policy. Once that factor is neutralized, the dollar may begin to rise again. The pound itself has no intrinsic growth drivers. Nevertheless, the "Trump factor" is enough for traders to base decisions on now.
GBP/USD 1-Hour Analysis
On the hourly timeframe, the GBP/USD pair maintains its upward trend despite breaking out of the trend channel. The pair's further movement entirely depends on Donald Trump and the development of the global trade war situation. Overall sentiment and the market's attitude toward America and its president remain sharply negative, making it extremely difficult for the dollar to expect a strong rally. The dollar keeps falling, and it falls even harder when news about tariffs emerges.
For May 30, we highlight the following important levels: 1.2863, 1.2981-1.2987, 1.3050, 1.3125, 1.3212, 1.3288, 1.3358, 1.3439, 1.3489, 1.3537, 1.3637-1.3667, 1.3741. The Senkou Span B (1.3420) and Kijun-sen (1.3503) lines can also serve as signal sources. Setting a Stop Loss at breakeven is recommended once the price moves 20 pips in the correct direction. The Ichimoku indicator lines may shift during the day, so this should be considered when determining trading signals.
Once again, no important events or reports are scheduled in the UK for Friday, and in the U.S., only three reports will be released, none of which can be considered significant. We believe the market will remain influenced by the court's decision regarding Trump's tariffs. High volatility and further dollar decline cannot be ruled out.
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.
