GBP/USD 5-Minute Analysis
On Wednesday, the GBP/USD currency pair continued trading within a sideways channel, clearly visible on the hourly timeframe. There was virtually no movement throughout the day, and no fundamental or macroeconomic events occurred. Only in the evening did the results of the Federal Reserve meeting become known, but we are not analyzing them yet, as we believe the market needs time to digest the information. It's also worth noting that European institutional traders did not have the opportunity to react to the Fed's decisions on Wednesday evening. Therefore, the reaction may continue during the European session on Thursday.
Today, we'll also receive the results of the Bank of England's policy meeting, which is equally significant but may also be ignored by the market. Of course, some reaction is possible, but will it be strong enough to break the flat movement seen in both major currency pairs? We're not confident. The market has shown, day after day, that it is unwilling to buy the US dollar, and second, it is waiting for active measures or decisions from Donald Trump while disregarding most other data.
From a technical perspective, the situation hasn't improved. The pair spent the entire day trading in the middle of the sideways channel, precisely where the Ichimoku indicator lines are currently situated, rendering them meaningless. Trading on a bounce from the upper or lower boundary of the channel may still be viable, but opening positions in the middle of the flat is futile and risky.
COT Report
COT reports for the British pound show that commercial traders' sentiment has constantly shifted in recent years. The red and blue lines—representing net positions of commercial and non-commercial traders—frequently intersect and mostly hover near the zero mark. That's the case now, indicating a relatively balanced number of long and short positions.
On the weekly timeframe, the price initially broke through the 1.3154 level, then surpassed the trend line, returned to 1.3154, and broke it again. Breaking the trend line suggests a high probability of further pound depreciation. However, the dollar continues to fall due to Donald Trump. Therefore, despite technical signals, news about the trade war could keep pushing the pound higher.
According to the latest report on the British pound, the "Non-commercial" group closed 2,900 BUY contracts and 6,400 SELL contracts. As a result, the net position of non-commercial traders increased by 3,500 contracts.
The fundamental backdrop still does not justify long-term buying of the pound sterling, and the currency remains at real risk of resuming a broader downtrend. The pound has gained significantly recently, but it's important to understand that this was due to Donald Trump's policies.
GBP/USD 1-Hour Analysis
On the hourly timeframe, GBP/USD maintains its upward trend, as the three-week flat range has not broken the trend and does not indicate a completed uptrend. The pound sterling has shown significant growth in recent months, although this is not due to the currency's strength. All upward movement in the pound has been driven by dollar weakness, triggered by Donald Trump. And that trend is not over yet. The market continues to largely ignore macroeconomic data. As a result, disorder and chaos dominate market behavior, while logic and consistency are absent.
Key levels for May 8: 1.2691–1.2701, 1.2796–1.2816, 1.2863, 1.2981–1.2987, 1.3050, 1.3125, 1.3212, 1.3288, 1.3358, 1.3439, 1.3489, 1.3537. The Senkou Span B line (1.3322) and Kijun-sen (1.3348) may also be signal levels. It is recommended to move the Stop Loss to breakeven if the price moves 20 pips in your favor. Ichimoku indicator lines may shift during the day, so consider this when identifying trading signals.
The BoE's meeting results will be announced on Thursday, and a rate cut is highly likely. This has been known for at least a week, so if the market intended to price it in, it would likely have done so already through selling pressure on the pound. We're not convinced we'll see a decline in GBP today, even if the BoE cuts rates by 0.5%. In the US, nothing noteworthy is scheduled for Thursday.
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.
