Analysis of GBP/USD 5M

The GBP/USD currency pair fluctuated in various directions on Friday, though "fluctuated" is a bit of an exaggeration. Despite the abundance of macroeconomic information, volatility was not particularly high again. Most of the published reports were contradictory. For instance, the index of business activity in the UK services sector decreased, while it increased in the manufacturing sector. In the United States, the manufacturing sector index decreased, but the services sector index increased. However, two reports determined the pound's movement direction in the morning and after lunch. Retail sales in the UK fell by 1.1% in October, prompting a decline in the pound during the first half of the day. In the second half of the day, the University of Michigan consumer sentiment index in the U.S. was significantly weaker than the previous month's level.

As a result, the hourly timeframe shows that the trend is once again sideways. Notably, the British pound had spent over a week in a sideways channel of 1.3115-1.3212, then barely broke out through the lower boundary. It turned out to only enter a new sideways channel of 1.3042-1.3115. Thus, we have formed yet another flat with all the ensuing consequences.

On the 5-minute timeframe, multiple trading signals were generated on Friday. In the morning, the price bounced twice from the 1.3096-1.3115 range, allowing traders to open short positions. The target level of 1.3050 was reached. However, the pair then exceeded this level and resumed rising shortly after the U.S. session opened, forming a buy signal. By the end of the day, the price returned to the 1.3096-1.3115 area.

COT Report

The COT reports for the British pound show that sentiment among commercial traders has fluctuated in recent years. The red and blue lines, which reflect the net positions of commercial and non-commercial traders, frequently cross and are generally close to the zero mark. Currently, they are almost at the same level, indicating a roughly equal number of buy and sell positions.

The dollar continues to decline due to Donald Trump's policies, as shown clearly on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time. The Federal Reserve will likely lower rates over the next 12 months. Demand for the dollar will consequently decline. According to the last COT report (dated October 7) for the British pound, the "Non-commercial" group opened 13,900 BUY contracts and 9,400 SELL contracts. Thus, the net position of non-commercial traders increased by 4,500 contracts over the week. However, this data is already outdated, and no new data is available.

In 2025, the pound rose significantly, but it should be understood that there is only one reason: Donald Trump's policies. Once this reason is mitigated, the dollar may start to rise, but no one knows when that will happen. The rate of increase or decrease in the net position for the pound (if it decreases) is not significant. For the dollar, that rate is falling in any case and typically at a faster pace.

Analysis of GBP/USD 1H

On the hourly timeframe, the GBP/USD pair has formed a new downward trend, which is best regarded as a trend with significant reservations. In reality, the British pound is currently trading in a new flat range between 1.3042 and 1.3115. In the coming weeks, a rise in the British pound is expected, but it is essential that the flow of uncontrolled negativity from the UK stops and the market begins to trade a bit more logically. We believe medium-term growth is likely to resume regardless of the local macroeconomic and fundamental backdrop, but this now requires overcoming the Ichimoku and trend lines.

On November 24, we highlight the following important levels: 1.2863, 1.2981-1.2987, 1.3042-1.3050, 1.3096-1.3115, 1.3212, 1.3307, 1.3369-1.3377, 1.3420, 1.3533-1.3548, 1.3584. The Senkou Span B line (1.3111) and the Kijun-sen line (1.3118) may also serve as signals. It is recommended to set a Stop Loss to break even when the price moves in the correct direction by 20 pips. The Ichimoku indicator lines may move during the day, which should be considered when determining trading signals.

On Monday, there are no significant or interesting events scheduled in either the UK or the U.S. Thus, volatility may again be low, and the price is unlikely to break out of the sideways channel at 1.3042-1.3115.

Trading Recommendations:

Today, traders may consider selling if the price bounces from the 1.3096-1.3118 area, targeting 1.3042-1.3050. Long positions will become relevant upon consolidation above the Kijun-sen line, targeting 1.3212.

Explanations for the Illustrations:

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