Analysis of GBP/USD 5M

The GBP/USD currency pair resumed its upward movement on Thursday, reflecting considerable optimism in market sentiment about a potential ceasefire among Iran, Israel, the U.S., and other countries in the Middle East. Recall that just on Wednesday, the ceasefire was essentially broken. However, it was disrupted only because the initial text of the agreement did not include many important points; for example, it did not clarify the fate of other countries in the Persian Gulf that are also involved in the conflict. Thus, there is hope that the next ceasefire will be more comprehensive. This is what the market believes at the moment. Otherwise, the GBP/USD pair would be approaching the area of 1.3179-1.3187.

Additionally, it is worth noting that the U.S. GDP report for the fourth quarter was "below the basement," with many experts once again predicting a recession in the American economy in 2026-2027. The rise in oil, gas, and fuel prices will inevitably reflect on American consumer spending, leading to a slowdown in the economy. Thus, the "golden age" of Trump has yet to arrive, and the U.S. economy is generally growing weaker and slower than under Joe Biden.

From a technical perspective, an upward trend is forming, and the British pound can continue its ascent as long as the ceasefire does not completely collapse. We can only hope that this does not happen.

On the 5-minute time frame, one trading signal was formed yesterday. During the European trading session, with a deviation of 3 pips, the price bounced from the area of 1.3369-1.3377, allowing traders to open long positions. Recall that a deviation of 3 pips is acceptable for the pound, while for the euro, the acceptable deviation is 2 pips. After this signal was formed, the price moved in the desired direction by about 50 pips throughout the day and, by the end of the day, almost reached the area of 1.3465-1.3480.

COT Report

COT reports for the British pound show that in recent years, the sentiment among commercial traders 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 often near the zero mark. Currently, the lines are diverging, with non-commercial traders still dominating with... sales. However, considering the events in the Middle East, it is no surprise that demand for risk currencies is falling while demand for the dollar is rising.

In the long term, the dollar continues to decline due to Donald Trump's policies, as shown in the weekly time frame (illustration above). The trade war will continue in one form or another for a long time. However, geopolitical factors now take precedence, providing powerful support for the American currency. According to the latest COT report (as of March 31), the "Non-commercial" group opened 4,800 BUY contracts and closed 900 SELL contracts. Thus, the net position of non-commercial traders increased by 5,700 contracts over the week.

Analysis of GBP/USD 1H

On the hourly time frame, the GBP/USD pair has begun to form a new upward trend, which can also be canceled at any moment. The market continues to closely monitor events in the Middle East, which account for 90% of market movements. If there are no geopolitical news items, the market prefers to wait for them in a calm trading mode. In the near future, it is important to understand whether further negotiations will take place or if the ceasefire has ended.

For April 10, we highlight the following important levels: 1.3096-1.3115, 1.3179-1.3187, 1.3369-1.3377, 1.3465-1.3480, 1.3533-1.3548, 1.3615, 1.3671-1.3681, 1.3751-1.3763. The Senkou Span B line (1.3319) and the Kijun-sen line (1.3330) may also act as sources of signals. It is recommended to set the stop-loss order to breakeven when the price moves in the correct direction by 20 pips. The Ichimoku indicator lines may shift during the day, which should be considered when determining trading signals.

On Friday, no major events are scheduled in the UK, while in the U.S., the March inflation report will be published, along with the University of Michigan consumer sentiment index. The consumer price index is an important indicator, and a reaction to it should follow. However, if the market ignores this report as well, it would be miraculous.

Trading Recommendations:

Today, traders may consider short positions targeting 1.3369-1.3377 if the price bounces a second time from the 1.3465-1.3480 area. Long positions can be opened if the price consolidates above the 1.3465-1.3480 area, targeting 1.3533-1.3548.

Explanations For Illustrations:

• Support and resistance price levels – thick red lines around which movement may end. They are not sources of trading signals.
• Kijun-sen and Senkou Span B lines – lines of the Ichimoku indicator transferred from the 4-hour timeframe to the hourly timeframe. They are strong lines.
• Extreme 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 COT charts – the size of the net position for each category of traders.