GBP/USD 5-Minute Analysis
On Tuesday, the GBP/USD currency pair also traded lower for the same reasons as the EUR/USD pair. However, it cannot be said that the British currency depreciated significantly—an upward movement may resume at any moment. The price could rebound from the Kijun-sen line of the Ichimoku indicator and resume growth. On Monday and Tuesday, the U.S. dollar had specific reasons to strengthen, and the market finally decided to react to factors not just favoring the euro or pound. However, it's important to remember that the current movement is merely a minor correction, nothing more.
The ascending channel indicates the uptrend's continuation on the hourly chart. On the 4-hour and daily timeframes, the uptrend is evident even without close inspection. The trade war remains the primary market theme, with very little positive news. In recent weeks, reports have suggested de-escalation, but that's not enough for the dollar. Trump's tariffs remain in place and, according to many experts, will cause irreparable harm to the U.S. economy regardless. Traders and investors understand this and are reluctant to take unnecessary risks when buying the dollar.
Tuesday's trading signals were very weak. The price frequently changed direction, indirectly indicating that the dollar has difficulty gaining strength. During the U.S. session, the U.S. durable goods orders report supported the dollar, which showed a decline of only 6.3% in April instead of the forecasted 7.8%. However, it's hard to call this report truly positive.
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
In the hourly timeframe, GBP/USD continues its upward movement, currently supported by an ascending channel. The pair's future trajectory entirely depends on Donald Trump and developments in the global trade war. The general sentiment and the market's attitude toward America—and particularly its president—remain sharply negative, making it extremely difficult for the dollar to show any strong recovery. The dollar continues to fall regularly, and when tariff-related news emerges, the decline intensifies.
For May 28, 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. Senkou Span B (1.3302) and Kijun-sen (1.3489) may also be signal sources. A Stop Loss should be set to breakeven if the price moves 20 pips in the favorable direction. The Ichimoku indicator lines may shift during the day, so this should be considered when identifying trade signals.
No significant events are scheduled in the UK for Wednesday. In the U.S., the FOMC meeting minutes will be released in the evening. This refers to the meeting where Fed Chair Jerome Powell reiterated his stance against cutting rates in the near future due to the uncertain outlook for the U.S. economy and inflation. Since this information didn't support the dollar at the time, it is unlikely to do so today, either.
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.
