Analysis GBP/USD 5M

The GBP/USD currency pair also showed growth on Friday, which is undeniable. The only question is: why so weak? The NonFarm Payrolls report not only failed, it virtually blocked the Federal Reserve's ability to raise the key rate before the end of the year. The market still does not believe the Fed will abandon monetary tightening and is pricing in one or two rate hikes. However, in the current circumstances, we believe we will not see a single round of tightening. Not until the NonFarm Payrolls report consistently shows job gains above 100,000 per month. Inflation can continue slowing on its own. If the Strait of Hormuz is ever opened and Iran and the US at least shift the conflict to a "frozen" status, that would be enough for oil prices to return to their usual range. In that case, inflation could also return to its original value—i.e., near 2%. Thus, we see no grounds for policy tightening, which was the key factor supporting the dollar over the past two months. At the same time, the European Central Bank could well raise rates as early as September.

Technically, the pound continues to form an uptrend on the hourly TF. It should be noted that, in the long term, the pair is in a flat, which is clearly visible on the weekly TF. After testing the lower boundary of the sideways channel, a logical move to the upper boundary began, which is not yet complete and may continue for several more weeks.

On the 5-minute TF on Friday, two buy signals were formed in the 1.3465–1.3480 area. However, as with the euro, these signals were extremely difficult to trade. Essentially, good entry conditions were provided only on a rebound from the 1.3480 level. By that time, the upward movement had effectively already ended.

COT Report

COT reports for the British pound show that non-commercial traders with net selling have dominated the market for several months. The net position is negative despite the preservation of a long-term uptrend. Given events in the Middle East, it is not surprising that demand for risk currencies remains weak. The war is formally over, but the conflict persists. Geopolitics may support demand for the US dollar in the near term. However, until the pair closes below the trend line, we would not expect a strong decline.

In the long term, the dollar will continue to weaken due to Donald Trump's policies, which is clearly visible on the weekly TF. The trade war will continue in one form or another for a long time, and Trump's policies are aimed directly and indirectly at weakening the US currency. The long-term uptrend remains, as evidenced by the trend line. The price recently tested that line and bounced off it. According to the latest COT report (dated August 4), the "Non-commercial" group closed 6,500 BUY contracts and 13,500 SELL contracts. Thus, the net position of non-commercial traders increased by 7,000 contracts.

Analysis GBP/USD 1H

On the hourly timeframe, the GBP/USD pair continues to form an uptrend. In the long term, both European currencies still "look" up and have been in sideways channels for a whole year. This does not negate the uptrend that began back in 2022. From the pound, we expect continued growth in the coming weeks, but the market is not in a hurry to sell the US currency again.

For August 10 we highlight the following important levels: 1.3042–1.3050, 1.3096–1.3115, 1.3179–1.3187, 1.3301–1.3309, 1.3369–1.3377, 1.3465–1.3480, 1.3588, 1.3671–1.3681. The Senkou Span B (1.3388) and Kijun-sen (1.3461) lines can also be sources of signals. It is recommended to move the Stop Loss to breakeven after the price moves 20 pips in the correct direction. Ichimoku indicator lines may shift during the day, which should be taken into account when determining trading signals.

On Monday, there are no important events scheduled in the UK or the US, but later in the week, an important inflation report will be published, once again determining the dollar's fate. Most likely, the market will now be waiting for that report. The dollar will get a chance to rise only if inflation accelerates.

Trading recommendations:

Today, traders may open short positions targeting 1.3388 if the price consolidates below the 1.3465–1.3480 area and the Kijun-sen line. Long positions can be opened in case of a rebound from the 1.3465–1.3480 area with a target of 1.3588.

Explanations for illustrations:

• Support and resistance price levels (thick red lines) indicate where the movement may end. They are not sources of trading signals.
• The Kijun-sen and Senkou Span B lines are Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extremum levels (thin red lines) indicate where the price has bounced previously. They are sources of trading signals.
• Yellow lines represent trend lines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts shows the net position size of each category of traders.