GBP/USD 5-Minute Analysis

The GBP/USD currency pair also continued its downward movement on Wednesday, for the same reasons as the EUR/USD pair. The U.S. economy grew by a full 3% in the second quarter, exceeding all expert forecasts. No one expected such a sharp and rapid recovery. However, let's recall that a rebound was possible after the collapse in Q1, as Donald Trump's tariffs played their role. The problem now is that inflation will also begin to rise — and we're likely to see this very soon. Every outcome comes at a cost. Trump's tariffs will bring huge additional revenue to the budget, but prices will rise, and the Federal Reserve can no longer "extinguish" inflation, since a key rate hike would likely trigger a political crisis — or a "heart attack" for Donald Trump.

From a technical perspective, a new downtrend is continuing to form on the hourly timeframe, which is part of a broader correction on the daily chart. Since the current movement is corrective, we expect the bullish trend that began in January this year to resume eventually. Of course, the fundamental backdrop this week has favored the dollar, but that doesn't mean the U.S. currency will return to its January levels.

On the 5-minute timeframe yesterday, one trading signal was formed. The price rebounded from the 1.3369 level — not very precisely — so we adjusted this level to 1.3377. After the rebound, the pair spent most of the day declining, so opening a short position was not easy, but earning from it was.

COT Report

COT reports for the British pound show that commercial trader sentiment has constantly shifted over recent years. The red and blue lines — representing net positions of commercial and non-commercial traders — frequently cross and generally stay near the zero mark. Once again, they've practically merged, indicating an almost equal number of buy and sell positions.

The dollar continues to weaken due to Donald Trump's policies, so demand from market makers for the British pound is currently of little importance. The trade war is likely to persist in one form or another for an extended period, resulting in a sustained decline in demand for the dollar. According to the latest report on the British pound, the "Non-commercial" group closed 7,000 BUY contracts and opened 21,400 SELL contracts. As a result, the net position of non-commercial traders fell by 29,400 contracts over the reporting week.

In 2025, the pound has risen significantly, but the reason is singular: the policies of Trump. Once that factor is neutralized, the dollar may begin to rise again, but no one knows when that will happen. It doesn't matter how quickly the pound's net position is growing — the dollar's is typically declining at a faster rate.

GBP/USD 1-Hour Analysis

On the hourly chart, the GBP/USD pair is not yet ready for a new upward trend. The price easily broke below the Ichimoku indicator lines, so the trend has once again turned bearish. We still do not believe that the dollar will rise strongly or for long. Traders don't need to worry about our skepticism — they can simply trade based on technical levels, keeping in mind that there are reasons for a short-term dollar rally this week, but a sustained trend would require more substantial fundamental support.

For July 31, we highlight the following key levels: 1.3125, 1.3212, 1.3369–1.3377, 1.3420, 1.3509, 1.3615, 1.3681, 1.3763, 1.3833, 1.3886. The Senkou Span B line (1.3472) and Kijun-sen line (1.3419) may also provide signals. It is recommended to set the Stop Loss to break-even when the price moves 20 pips in the right direction. Note that the Ichimoku indicator lines may shift during the day, which should be considered when identifying trade signals.

On Thursday, the economic calendar is again empty for the UK, and only a few minor reports will be released in the U.S. As such, market volatility may be lower today, and the British pound may pause until Friday's release of key U.S. data.

Trading Recommendations

We expect the market to be calmer on Thursday compared to the beginning of the week, so the price movement could resemble a sideways range. Traders will need time to fully digest the results of the FOMC meeting and begin preparing for the U.S. labor market and unemployment data.

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.