GBP/USD 5-Minute Analysis
On Wednesday, the GBP/USD currency pair showed mixed movements throughout the day but generally maintained a downward trend — if we can even call the current behavior a "trend." There was no macroeconomic background during the day, but plenty of news surrounding the trade war. The European Union may introduce 25% tariffs on U.S. imports as early as next week. On Tuesday, China responded to Trump with 84% tariffs, and now the White House is proposing 500% tariffs for China "because it's so defiant and arrogant." Undoubtedly, the EU is also about to receive a "pleasant reply." Under these circumstances, it's still surprising that the dollar has grown so strongly against the British pound — or has grown at all. But as we've said before, there's not much logic in market movements.
Today, the U.S. inflation report will be published, which, to be frank, nobody cares about. If inflation drops, the Federal Reserve won't cut rates since Trump's tariffs may push consumer prices to double within the year. If inflation doesn't decline despite forecasts, that will also mean nothing. Right now, macroeconomic indicators mean nothing to the market. A reaction might occur, but Trump still runs the show.
On the 5-minute chart, the price bounced off the 1.2863 level, then off the 1.2796–1.2816 area, eventually breaking through this area. All three signals were relatively weak, making it difficult to profit from them. Still, none were false — the price moved at least 20 pips in the correct direction in two out of three cases. Volatility in GBP remains high, though it's lower than that of the euro, which is also quite unusual.
COT Report
COT reports for the British pound show that sentiment among commercial traders has been constantly shifting in recent years. The red and blue lines, which represent the net positions of commercial and non-commercial traders, frequently cross and mostly hover around the zero line. At present, they remain close together, indicating a relatively balanced number of long and short positions.
On the weekly timeframe, the price first broke through the 1.3154 level, then overcame the trend line, returned to 1.3154, and bounced off it. Breaking the trend line suggests a high probability that the pound's decline will continue. The bounce from 1.3154 increases the likelihood of this scenario. Once again, the weekly chart looks as though the pound is preparing to move south.
According to the latest report on the British pound, the "Non-commercial" group closed 4,000 long contracts and opened 5,600 short contracts. As a result, the net position of non-commercial traders fell by 9,600 contracts.
The fundamental backdrop still provides no basis for long-term buying of the British pound, and the currency itself still has real potential to continue the global downtrend. The recent rally in the pound was driven by one factor alone — Donald Trump's policy.
GBP/USD 1-Hour Analysis
On the hourly time frame, the GBP/USD pair — after nearly a month of flat movement — showed a sharp surge, followed by an even stronger collapse. Even though the pound had been rising for three months, this had nothing to do with the pound's strength. The dollar weakness triggered by Donald Trump caused the entire upward move. The British pound is falling like a stone, which is equally challenging to explain from a fundamental or macroeconomic perspective. However, if tomorrow the pound's fall ends and the dollar resumes its decline, we won't be surprised.
For April 10, we highlight the following important levels: 1,2511, 1,2605-1,2620, 1,2691-1,2701, 1,2796-1,2816, 1,2863, 1,2981-1,2987, 1,3050, 1,3119, 1,3175, 1,3222, 1,3273, 1,3358. Also, keep an eye on Senkou Span B (1.3036) and Kijun-sen (1.2956) lines — these can also serve as trading signals. Setting Stop Loss to breakeven if the price moves 20 pips in your favor is recommended. Ichimoku indicator lines may shift during the day, so factor this into your trade setup.
No significant events are scheduled in the UK on Thursday, and while the U.S. Consumer Price Index will be published, it is of little relevance to traders in the current environment. Trump's statements and actions remain far more important.
Illustration Explanations:
- Support and Resistance Levels (thick red lines): Thick red lines indicate where movement may come to an end. Please note that these lines are not sources of trading signals.
- Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the 4-hour timeframe to the hourly timeframe. These are strong lines.
- Extreme Levels (thin red lines): Thin red lines where the price has previously bounced. These serve as sources of trading signals.
- Yellow Lines: Trendlines, trend channels, or any other technical patterns.
- Indicator 1 on COT Charts: Represents the net position size for each category of traders.
