Analysis of GBP/USD 5M

The GBP/USD currency pair had every reason to show strong growth on Friday. However, as we mentioned, the market did not know how to interpret all the information it received and continues to ignore inconvenient reports. For example, on Tuesday and Wednesday last week, the UK published reports on unemployment and inflation. Both reports are significant and indicate a decline in the British currency, which we indeed witnessed. On Friday, reports on UK business activity and retail sales suggested a rise in the British currency. The market responded with cautious buying, which was no match for the preceding sell-offs. In the afternoon, the US fourth-quarter GDP report, a tear-jerker, was released, but even then, the dollar was in no rush to fall. In the evening, the Supreme Court overturned Trump's tariffs, and Trump immediately reinstated them in another form, while on Saturday, the US leader raised the tariff rate to 15%, presumably considering 10% insufficient.

On the hourly timeframe, the downward trend remains intact, so there are no grounds for buying the British pound in the short term. In the long term, an upward trend persists, so we expect it to resume. For this to happen, the trend on the hourly timeframe must change to an upward one, which requires the price to consolidate above the Senkou Span B line and the trend line.

On the 5-minute timeframe on Friday, two identical trading signals formed a bounce from the 1.3437 level. They were perfectly accurate. By the end of the day, the pair rose by 40-50 pips, so the only buy trade turned out to be profitable.

COT Report

The COT reports for the British pound indicate that commercial traders' sentiment has been changing frequently in recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, frequently cross each other and are mostly situated near the zero mark. Currently, the lines are approaching one another, with non-commercial traders still predominantly holding... short positions. Recently, speculators have been actively increasing their long positions, so a change in sentiment may come soon, but it is not significantly affecting the GBP/USD pair.

The dollar continues to decline due to Donald Trump's policies, as clearly seen on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time, and the Fed will, in any case, be lowering rates over the next 12 months. Demand for the dollar will decrease one way or another. According to the latest COT report (dated February 17) on the British pound, the "Non-commercial" group closed 6,400 buy contracts and opened 10,200 sell contracts. Thus, the net position of non-commercial traders decreased by 16,600 contracts over the week.

In 2025, the pound rose significantly, but it should be understood that there is only one reason for this: Donald Trump's policies. Once this factor is neutralized, the dollar may begin to rise. But when this will happen is unknown.

Analysis of GBP/USD 1H

On the hourly timeframe, the GBP/USD pair continues to form a downward trend. Various events have consistently hindered the British currency's growth or recently supported the dollar. Some data is simply ignored by the market. We still believe that, in the medium term, the British pound will rise amid the decline of the US currency. However, at this time, the trend is downward, so we should await its completion.

For February 23, we highlight the following important levels: 1.3201-1.3212, 1.3307, 1.3369-1.3377, 1.3437, 1.3533-1.3548, 1.3615, 1.3671-1.3681, 1.3751-1.3763, 1.3846-1.3886, 1.3948. The Senkou Span B line (1.3618) and Kijun-sen line (1.3536) may also be sources of signals. It is recommended to set a stop-loss order to break even if the price moves in the correct direction by 20 pips. The lines of the Ichimoku indicator may shift during the day, which should be considered when determining trading signals.

On Monday, no significant events or reports are scheduled in the UK or the US. However, the market may react throughout the day to Donald Trump's new tariffs or any other news related to Trump, Iran, tariffs, and so on.

Trading Recommendations:

Today, traders may consider short positions with a target at 1.3437 if the price rebounds from the 1.3533-1.3548 area. Long positions will become relevant with a target of 1.3615-1.3618 if the price breaks above the trend line.

Explanations for Illustrations:

• Support and Resistance Levels: Thick red lines where movement may end. They are not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Lines of the Ichimoku indicator transferred from the 4-hour timeframe to the hourly timeframe. They are strong lines.
• Extreme Levels: Thin red lines where the price previously bounced off. They are sources of trading signals.
• Yellow Lines: Trend lines, trend channels, and any other technical patterns.
• Indicator 1 on COT Charts: Size of the net position for each category of traders.