GBP/USD 5-Minute Analysis

On Friday, the GBP/USD currency pair was trading in a downtrend. The price easily broke through the Senkou Span B and Kijun-sen lines, as well as worked through the 1.3420 level. There were no strong reasons for such a significant drop in the British currency. Two pretty important reports were published on Friday, but we do not believe they triggered this movement.

The first was the UK retail sales report, which showed a 0.9% month-over-month (m/m) increase, versus the forecast of +1.2%. Given the disastrous performance in the previous month (-2.8%), this result can still be considered positive, although it fell short of expectations. Therefore, this report could not have been the reason for the pound's decline.

The U.S. durable goods orders report painted the opposite picture. Order volumes fell by 9.3%, which is a weak figure, but analysts had forecast a decline of 10.8%. Thus, the actual result was technically better than expected. Nonetheless, the pound fell all day long without even attempting a rebound.

However, on the 5-minute timeframe, the movements were nearly perfect — just like for the euro. At the start of the European session, the price bounced off the 1.3494–1.3509 area and remained in a steady downtrend throughout the day. During the U.S. session, the 1.3420 level was tested, and price action ended around this area. As a result, traders could have opened a short position, which would have closed with a solid profit.

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 timeframe, GBP/USD is currently not ready to form a new uptrend. The price easily broke through the Ichimoku indicator lines, so the trend has turned downward again. However, we still don't believe the dollar will strengthen for long or significantly. Traders shouldn't worry about our skepticism and can simply trade according to technical levels while keeping in mind that there are currently few valid reasons for the dollar to strengthen.

For July 28, we highlight the following important levels: 1.3125, 1.3212, 1.3369, 1.3420, 1.3509, 1.3615, 1.3681, 1.3763, 1.3833, 1.3886. The Senkou Span B (1.3490) and Kijun-sen (1.3500) lines can also generate signals. It is recommended to place the Stop Loss at breakeven when the price moves 20 pips in your favor. The Ichimoku indicator lines may shift during the day, which should be considered when interpreting signals.

On Monday, there are no scheduled economic events in the UK or the US. Low volatility is expected throughout the day, with no major catalysts for market reaction.

Trading Recommendations

On Monday, we believe traders can open long positions if the price rebounds from the 1.3420 level, targeting the Kijun-sen line at 1.3494. On Friday, the price failed to break this level four times. If the level is eventually broken, short positions with a target of 1.3369 can be considered.

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.