GBP/USD 5M Analysis
The GBP/USD currency pair traded very weakly on Monday, although with a slight upward bias. There was a complete lack of macroeconomic and fundamental background both in the UK and the US yesterday, so traders had nothing to react to throughout the day. However, they weren't particularly keen on trading ahead of a completely chaotic Tuesday. A considerable number of important reports will be published today in both the UK and the US, so no one wants to take risks by opening positions on Monday. The upward trend on the hourly timeframe for the British pound remains, but no one can know how the day will end. We believe that macroeconomic reports may provoke a significant decline in the pair (under certain circumstances), but at the same time, they will not affect the global fundamental factors. Conclusion: if the pair does drop today, it will inevitably recover and strive to continue the upward trend of 2025.
On the 5-minute timeframe, one formal buy signal was generated yesterday, but it was forming for nearly 12 hours. The price settled above the 1.3360-1.3377 area, but by the time the signal formed, it was already clear we would not see any volatile movements. Therefore, traders could work this trade, and as long as the price remains above the 1.3360-1.3377 area, long positions can be held. If today's macroeconomic reports support the pound, the long positions are already open.
COT Report
The COT reports for the British pound show that, in recent years, commercial traders' sentiment has been constantly changing. The red and blue lines, representing the net positions of commercial and non-commercial traders, frequently cross each other and are mostly close to the zero mark. Currently, they are almost at the same level, indicating an approximately equal number of long and short positions.
The dollar continues to decline due to Donald Trump's policies, which is clearly visible on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time. The Federal Reserve will inevitably lower rates in the next 12 months. Demand for the dollar will decline one way or another. According to the latest COT report (from October 28) for the British pound, the "Non-commercial" group opened 7,000 BUY contracts and 10,500 SELL contracts. Thus, the net position of non-commercial traders decreased by 3,500 contracts for the week. However, this data is now outdated, and there are no fresh figures.
In 2025, the pound rose significantly, but it should be understood that the reason is singular: Trump's policies. Once this reason is neutralized, the dollar could start to rise, but when that will happen is unknown. It does not matter how quickly the net position for the pound is growing or falling (if it is falling). For the dollar, it is declining anyway, and generally at a faster pace.
GBP/USD 1H Analysis
On the hourly timeframe, the GBP/USD pair continues to form an upward trend. We believe growth will continue in the medium term, regardless of the local macroeconomic and fundamental backdrop, but today and this week, a noticeable decline is certainly possible. In December, much will depend on US labor market data, unemployment, and inflation, which will determine the future direction of the Fed's monetary policy.
For December 16, we identify the following important levels: 1.2863, 1.2981-1.2987, 1.3042-1.3050, 1.3096-1.3115, 1.3201-1.3212, 1.3307, 1.3369-1.3377, 1.3420, 1.3533-1.3548, and 1.3584. The Senkou Span B line (1.3281) and Kijun-sen (1.3360) may also be sources of signals. It is recommended to place the Stop Loss at breakeven 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 Tuesday, important reports on unemployment, the number of unemployed, wages, and indices of business activity in the services and manufacturing sectors are scheduled for release in the UK. In the US, reports on unemployment, Non-Farm Payrolls, ADP, retail sales, and S&P business activity indices will be released. At least half of these reports can significantly impact market sentiment.
Trading Recommendations:
Today, traders may consider selling if the price settles below the trend line and below the Kijun-sen line, with targets at 1.3307 and the Senkou Span B line. Long positions remain relevant when the price is above the area of 1.3369-1.3377, with targets at 1.3420 and above.
Illustration Explanations:
Support and Resistance Levels – Thick red lines around which movement may end. They 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. They are strong lines.
Extreme Levels – Thin red lines from which the price has previously rebounded. They are sources of trading signals.
Yellow Lines – Trend lines, trend channels, and any other technical patterns.
Indicator 1 on COT Charts – The size of the net position for each category of traders.
