GBP/USD 5-Minute Analysis

The GBP/USD currency pair crashed downward on Tuesday for rather formal reasons, and on Wednesday, it calmly began recovering back to its original positions. The day before, we warned that the decline of the British currency looked blatantly odd, like a manipulation by market makers. By Wednesday, our suspicions were already being confirmed, as the British pound spent the entire day rising. Of course, one could argue that the JOLTs report negatively impacted the dollar, but it was released in the evening, when the dollar had already been falling for most of the day.

Therefore, the explanation of "rising UK bond yields" doesn't really explain anything, as US Treasury yields are also rising—tit for tat. As before, we still do not see any reason for medium-term growth in the US currency. The correction is dragging on, but switching to the daily timeframe reveals just how weak the current correction is and how much larger it could theoretically be. However, it will still be extremely difficult for the dollar to grow against European competitors without macroeconomic support. If tomorrow's labor and unemployment data disappoint, nothing might save the dollar.

On the 5-minute timeframe, the European session started with a "rollercoaster ride." The market clearly hasn't exited the emotional state from Tuesday, so the price whipsawed, forming two false signals in the 1.3369–1.3377 area. The second signal did not result in a loss, as the price moved 20 pips in the correct direction. Unfortunately, the first buy signal closed with a slight loss. The third signal near 1.3369–1.3377 shouldn't have been traded at all.

COT Report

COT reports for the British pound indicate that over recent years, the sentiment of commercial traders has shifted constantly. The red and blue lines, reflecting net positions of commercial and non-commercial traders, frequently cross and usually close to zero. Currently, they're almost level, indicating a nearly equal number of buy and sell positions.

The dollar continues to weaken due to Trump's policy, so market makers' demand for sterling is not particularly important right now. The trade war is likely to persist in some form for an extended period. The Federal Reserve will be forced to cut rates at some point in the coming year. Demand for the dollar will decline anyway. According to the latest report on the pound, the "Non-commercial" group closed 5,300 BUY contracts and opened 800 SELL contracts. Thus, the net position of non-commercial traders shrank by 6,100 contracts over the reporting week.

In 2025, the pound strengthened greatly, but this was for one reason: Trump's policy. As soon as this is neutralized, the dollar could resume rising—but no one knows when that will happen. It doesn't matter how fast the net position of the pound rises or falls. For the dollar, it continues to decline, usually at a faster pace.

GBP/USD 1-Hour Analysis

On the hourly timeframe, GBP/USD is ready to form a new uptrend, but Tuesday's trading ruined the entire technical picture. In our view, the pair has corrected enough in recent weeks to resume the global uptrend that started back in January. The fundamental and macroeconomic background hasn't changed in recent weeks, so there's still no reason to expect dollar growth. Pound sterling is quickly recovering and has much more potential to rise than to fall.

For September 4, we highlight the following key levels: 1.3125, 1.3212, 1.3369–1.3377, 1.3420, 1.3509–1.3525, 1.3615, 1.3681, 1.3763, 1.3833, 1.3886. The Senkou Span B (1.3482) and Kijun-sen (1.3441) lines can also be signal sources. It is recommended to set the Stop Loss to breakeven if the price goes 20 pips in your favor. Ichimoku indicator lines can move during the day, which should be considered when identifying trading signals.

On Thursday, there are again no important UK events scheduled, but the US ISM Services PMI will be published—a key indicator. If this index comes in weak, as its "brother" did, the dollar's decline will reasonably continue.

Trading Recommendations

We believe that on Thursday, the pound sterling may continue its recovery. The overcoming of each new line or level will allow traders to open new longs. The only thing to observe is the ISM index in the second half of the day.

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.
• Indicator 1 on the COT charts – the size of the net position for each category of traders.