Analysis of GBP/USD 5M

The GBP/USD currency pair continued to move in a "meat grinder" style on Thursday. Throughout the day, the price changed direction several times, remaining within a narrow range. There were no clear reasons for such frequent directional changes, and only one secondary report was published during the day in both the UK and the US. The number of unemployment claims in the US nearly matched forecasts, so it's clear this report wasn't the cause of any significant movement. There have been no "loud" news reports from Iran or related to Iran.

From a technical standpoint, the downward trend is evident. Therefore, the British pound remains much closer to a new decline than to a rise. The only thing that could help today is poor data on the US labor market and unemployment rates. However, it is important to remember that the actual values of these reports are less significant than their alignment or misalignment with forecasts. Values can be weak but better than expected, which would prompt a new rise in the US dollar. Monetary policy has temporarily taken a back seat, as concerns about a new wave of inflation connected to rising energy prices amid the Middle Eastern war and the blockade of the Strait of Hormuz dominate globally. Thus, it is unlikely that central banks will dare to lower key rates in the near future.

On the 5-minute timeframe, the British pound remained one of the few currencies to please traders. Yesterday, four trading signals formed, all excellent, unlike those for the euro. At the start of the European trading session, the pair bounced off the 1.3307 level, and after a few hours, it reached the 1.3369-1.3377 area. A double bounce from this area allowed traders to open short positions, and after a few hours, the pair returned to the 1.3307 level, forming another buy signal that could also be closed in a small but profitable manner closer to the evening.

COT Report

COT reports for the British pound show that sentiment among commercial traders has been changing steadily 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 near the zero mark. Currently, these lines are drawing closer, with non-commercial traders still holding a dominant position in... sales. Recently, speculators have aggressively increased long positions; however, they have not yet managed to enter a zone of superiority.

The dollar continues to decline due to Donald Trump's policies, as shown on the weekly timeframe. The trade war will persist in one form or another for a long time, and the Fed will inevitably lower rates in the coming 12 months. Demand for the dollar will fall one way or another. According to the latest COT report (dated February 24) regarding the British pound, the "Non-commercial" group closed 14,800 contracts in buys and 100 contracts in sells. Consequently, the net position of non-commercial traders decreased by another 14,700 contracts over the week.

In 2025, the pound rose significantly, but it is essential to understand that there was only one reason: Donald Trump's policies. Once this reason is addressed, the dollar may begin to rise. But when that will happen, no one knows.

Analysis of GBP/USD 1H

On the hourly timeframe, the GBP/USD pair could have formed an upward trend; however, geopolitics have dragged the British pound into a downturn. Despite the strong decline of the pair in February and March, we still regard it as a correction. The daily timeframe confidently signals the preservation of the upward trend. Unfortunately, geopolitics is highly unpredictable and can drastically change market sentiment, which we are seeing now.

For March 6, we highlight the following important levels: 1.3096-1.3115, 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. The Senkou Span B line (1.3447) and Kijun-sen (1.3378) may also serve as sources of signals. It is recommended to set the Stop Loss order to breakeven once the price has moved in the correct direction by 20 pips. The Ichimoku indicator lines may shift during the day, which should be taken into account when determining trading signals.

On Friday, no significant events are scheduled in the UK, while important reports such as NonFarm Payrolls and the unemployment rate will be published in the US, along with several secondary indicators. We believe that another "storm" may begin in the market in the second half of Friday.

Trading Recommendations:

Today, traders may open new short positions targeting 1.3201-1.3212 if the pair consolidates below 1.3307. Long positions will become relevant with targets in the area of 1.3369-1.3377 if the price bounces from the level of 1.3307.

Explanations for Illustrations:

• Price Levels of Support and Resistance – thick red lines around which movement may end. These are not sources of trading signals.
• Kijun-sen and Senkou Span B Lines – lines from the Ichimoku indicator transferred from the 4-hour timeframe to the hourly one. They are considered strong lines.
• Extremum Levels – thin red lines from which the price previously bounced. They are sources of trading signals.
• Yellow Lines – trend lines, trend channels, and any other technical patterns.
• Indicator 1 on the COT Charts – the size of the net position of each category of traders.