GBP/USD 5-Minute Analysis
The GBP/USD currency pair continued its upward movement on Monday, which began last week. The price successfully broke through both Ichimoku indicator lines, so from a technical standpoint, the trend on the hourly timeframe has turned upward. However, we want to draw traders' attention to the higher timeframes, where it is clear that the overall movement remains sideways. Monday's rally was just another upward swing within that flat range. It was triggered solely by news of the U.S. credit rating downgrade, which we would not call particularly important. But the market thought otherwise, and the dollar doesn't need much to fall now.
News of the de-escalation of the trade war and reduced trade tensions helped the dollar strengthen somewhat, but only slightly, as we see. News about the Bank of England's rate cut, the Federal Reserve maintaining monetary policy parameters, its hawkish stance, and a trade deal with the UK were either ignored or only modestly priced in by the market. Meanwhile, a secondary news item that doesn't materially change much triggered a decline in the dollar of more than 100 pips.
On the 5-minute timeframe, several signals were generated on Monday, although some were not ideal. Let's recall that the pair remains flat on the 4-hour chart, and price movements inside such a range are far from smooth or technically clean. Throughout the European session, the pair was in an uptrend, bouncing off the 1.3288 level back during the Asian session and climbing about 100 pips. Therefore, traders could have opened long positions early in the morning. Unfortunately, near the 1.3358 level, the price stalled and even formed a sell signal, preventing the capture of the whole upward move. Later, the price returned to 1.3358, but signals near it came too late and were no longer worth trading.
COT Report
COT (Commitment of Traders) reports on the British pound show that commercial traders' sentiment has constantly shifted in recent years. The red and blue lines, representing net positions of commercial and non-commercial traders, frequently intersect and often stay close to the zero level. Currently, they are near each other again, indicating a roughly balanced number of long and short positions.
The dollar continues to decline due to Donald Trump's policies, so market makers' interest in the pound is not particularly relevant at the moment. If the global trade war continues to de-escalate, the dollar might have a chance to strengthen, but that chance still needs to be realized.
According to the latest report, the non-commercial group closed 4,800 long contracts and 2,800 short contracts. As a result, the net position of non-commercial traders declined by 2,000 contracts.
There are still no fundamental grounds for long-term purchases of the British pound, and the currency may continue its broader downtrend. The pound has recently risen sharply, mainly due to Trump's political influence. Once that factor fades, the dollar could regain strength. The pound has no independent reason to rise.
GBP/USD 1-Hour Analysis
In the hourly timeframe, the GBP/USD pair had broken out of its sideways channel and started a downward movement—but it didn't last long. Currently, we can say that the flat range continues. Any renewed decline will depend entirely on Donald Trump and developments in the global trade war. If tensions continue to ease and trade deals are signed, the dollar may resume strengthening. However, it's important to note that the market still dislikes the U.S. dollar, doesn't believe in full de-escalation of the trade conflict, and especially doesn't trust Trump.
Key levels for May 20: 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 signal levels: Senkou Span B (1.3328), Kijun-sen (1.3248). A Stop Loss should be set to breakeven once the price moves 20 pips in the correct direction. Ichimoku lines can shift during the day, so they should be monitored for trading signals.
No significant events are scheduled in the UK or the U.S. on Tuesday, so no strong trend movements or high volatility are expected. Of course, Trump could make unexpected major statements, or new information like Monday's credit downgrade could surface. But such events are unpredictable. We can expect a flat market or a mild downward correction if no surprises occur.
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.
