GBP/USD 5-Minute Analysis

On Tuesday, the GBP/USD currency pair continued its downward movement. Although core inflation in the U.S. rose exactly in line with forecasts—and the core rate even accelerated less than expected—the market for some reason treated this report as very bullish for the U.S. dollar. Let us recall that inflation no longer has the same impact on the Federal Reserve's monetary policy as it once did. A new rise in the Consumer Price Index means that the chances of a Fed rate cut in the upcoming meetings have become even lower. However, throughout 2025, the U.S. central bank has kept rates at 4.5%, while the European Central Bank and the Bank of England have been cutting theirs. So, why is the dollar only now benefiting from the Fed's hawkish stance?

We believe a technical correction is ongoing, and yesterday, traders simply used the inflation report as a formal reason to sell. After all, the report did allow for hawkish interpretations, which in turn justified buying the dollar. Yet over the last six months, the market has ignored many similar hawkish events. And yesterday, there wasn't even any deviation from the forecast. Traders had nothing to react to. However, from a technical standpoint, the downtrend remains intact, so the current movement appears logical and consistent. It's worth noting that the pair had been declining even before yesterday, despite no significant macroeconomic data. Donald Trump continues to raise tariffs and escalate tensions, but the market has been ignoring those factors for a week and a half now.

On the 5-minute timeframe, several trading signals formed yesterday near the 1.3439 level, but the intraday movements were too erratic. During the European session, traders may have attempted to act on those signals, but both proved to be false, and volatility was near zero. During the U.S. session, when the inflation report was released, the market began to fluctuate in different directions. Therefore, we don't believe entering the market at that time was justified.

COT Report

COT reports for the British pound show that in recent years, commercial traders' sentiment has changed constantly. The red and blue lines, representing the net positions of commercial and non-commercial traders, frequently cross and usually stay close to the zero line. Currently, they are also close to each other, indicating a roughly equal number of buy and sell positions. However, over the past 18 months, the net position has been growing and in recent months has been "bullish."

The dollar continues to decline due to Donald Trump's policies, so for now, the demand from market makers for the British pound is not particularly important. The trade war will continue in some form for a long time. Demand for the dollar will decline in one way or another. According to the latest report on the British pound, the "Non-commercial" group opened 800 BUY contracts and closed 900 SELL contracts. Thus, the net position of non-commercial traders increased by 1,700 contracts over the reporting week, which is practically insignificant.

The pound rose significantly in 2025, but it should be understood that the reason was Trump's policies. Once that factor is neutralized, the dollar could start to strengthen—but no one knows when that will happen. The dollar is only at the beginning of a challenging period. There are still 3.5 years left of Trump's administration.

GBP/USD 1-Hour Analysis

On the hourly timeframe, the GBP/USD pair continues its downward movement, as confirmed by the descending channel. Last week, the market largely ignored Trump's new tariffs and continues to do so this week. We believe that the new tariffs will be priced in once the current technical correction ends. Therefore, at this stage, it is possible to trade downward based on technical grounds—but it should be noted that the dollar still lacks strong reasons for growth.

For July 16, we highlight the following key levels: 1.3125, 1.3212, 1.3369, 1.3420, 1.3489, 1.3537, 1.3615, 1.3741–1.3763, 1.3833, 1.3886. The Senkou Span B line (1.3655) and the Kijun-sen line (1.3498) may also act as sources of signals. It is recommended to move the Stop Loss to breakeven once the price moves 20 points in the correct direction. The Ichimoku indicator lines may shift throughout the day, which should be taken into account when identifying trading signals.

On Wednesday, the UK will release the June inflation report, but it is unlikely to trigger the same emotional reaction as the U.S. inflation did. In the U.S., only minor data is scheduled for release, among which industrial production stands 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.