GBP/USD Analysis 5M

The GBP/USD pair continued its upward movement on Monday, in stark contrast to the EUR/USD pair, which remained stagnant. The British pound is trading much more logically than the European currency. It is worth recalling that there were no substantial reasons for the recent decline of the pound. Many experts have viewed yet another UK prime minister's resignation as a crisis. The Federal Reserve's hints at potential rate hikes are seen as sufficient grounds for mass dollar purchases. Meanwhile, the geopolitical factor has been largely disregarded in recent weeks. We have consistently stated that any rise in the U.S. dollar under the current circumstances is illogical. This rise has ended, and a logical recovery of the British currency, which has lost many positions due to baseless declines, has begun. On Monday, the market did not even pay attention to the ISM Services PMI in the U.S., which was not expected to cause a decline in the dollar. But this is irrelevant now. The dollar has been rising for too long and has accounted for all its positive factors. On the daily timeframe, the pound has started rising from the lower boundary of the sideways range toward the upper boundary, maintaining a long-term upward trend. The same is expected from the euro.

From a technical standpoint, the British pound remains within an upward trend, as clearly indicated by the trend line. The 1.3369-1.3377 area has been breached, allowing the British currency to continue building on its recent gains. There will be very few significant events this week, so traders may focus on technical analysis. We believe that the upward movement should at least continue within the sideways channel on the daily timeframe.

On the 5-minute timeframe, one buy signal was generated on Monday. During the U.S. trading session, the price broke through the 1.3369-1.3377 area, so traders could open long positions, which should carry over into Tuesday.

COT Report

COT reports on the British pound indicate that commercial traders' sentiment has been constantly changing in recent years. The red and blue lines showing the net positions of commercial and non-commercial traders often cross and are generally close to the zero mark. Currently, the lines are moving apart, with non-commercial traders still dominating with their... short positions. Given the events in the Middle East, it is not surprising that demand for riskier currencies was weak in 2026. However, with the war concluded, reasons to buy the dollar are now scarce, and the British pound has not declined significantly over the long term despite low demand from professional players.

In the long term, the dollar will continue to decrease due to Donald Trump's policies, which is clearly visible on the weekly timeframe. The trade war will continue in one form or another for a long time, and Trump's policies are aimed both directly and indirectly at weakening the American currency. The long-term upward trend remains, as indicated by the trend line. Last week, the price touched this line and bounced back. According to the latest COT report (dated June 30), the "Non-commercial" group closed 3,600 BUY contracts and opened 7,200 SELL contracts. Thus, the net position for non-commercial traders decreased by a further 3,600 contracts over the week.

GBP/USD Analysis 1H

On the hourly timeframe, the GBP/USD pair continues to form an upward trend. In the long term, the British pound still has few reasons to decline, while the U.S. dollar has few reasons to grow. The market has recently ignored most fundamental, geopolitical, and macroeconomic events, and on the daily timeframe, the pair is positioned at the lower end of the sideways range. Therefore, we continue to expect upward movement.

For July 7, we highlight the following important levels: 1.3042-1.3050, 1.3096-1.3115, 1.3179-1.3187, 1.3301-1.3309, 1.3369-1.3377, 1.3465-1.3480, 1.3588, 1.3671-1.3681. The Senkou Span B (1.3260) and Kijun-sen (1.3307) lines may also serve as signal sources. It is recommended to set a Stop Loss at breakeven if the price moves in the right direction by 20 pips. The Ichimoku indicator lines may shift throughout the day, which should be considered when determining trading signals.

On Tuesday, there are no significant events or publications scheduled in the UK, while in the U.S., only the weekly ADP labor market report will be released. However, the British pound has been rising for two weeks, not due to macroeconomic fundamentals. We believe the market has exhausted all reasons to buy the dollar, many of which were baseless.

Trading Recommendations:

Today, traders may consider short positions targeting the 1.3301-1.3309 area if the pair consolidates below 1.3369-1.3377. Long positions can be maintained after breaking above the 1.3369-1.3377 area, targeting 1.3465-1.3480.

Explanations to Illustrations:

• Support and resistance price levels (resistance/support) are depicted as thick red lines where movement may finish. They are not sources of trading signals.
• The Kijun-sen and Senkou Span B lines are Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are considered strong lines.
• Extreme levels are marked as thin red lines where the price has previously bounced. They serve as sources of trading signals.
• Yellow lines represent trend lines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts shows the net position size for each category of traders.