Analysis of GBP/USD 5M

The GBP/USD pair also experienced slight declines on Thursday, with the pivotal area remaining at 1.3301-1.3309. As long as it is not breached, talking about a continued decline is futile. We have already mentioned that despite ongoing violations of the truce in the Middle East and open attacks by adversaries in recent days, full-scale war has not resumed. The market, in any case, is not going to start a second wave of risk aversion. Therefore, we do not believe in a strong rise of the US dollar, but at the same time, the market seems to have no choice but to hold off on selling the American currency. Yesterday, the Producer Price Index (PPI) in the US was released, which confirmed the worst fears. Inflation in the US is rising across the board. The Consumer Price Index accelerated in May to 4.2%, core inflation to 2.9%, and the PPI to 6.5%. Thus, we would expect further growth in the core indicator in the coming months.

From a technical perspective, the downward trend continues, with the price located below the Ichimoku indicator lines. As we predicted, the pair's growth on Friday was an exception to the rule, as the market has not been paying attention to macroeconomic data for some time. Geopolitics also does not support the dollar as strongly as before, but it continues to compel traders, at the very least, to refrain from selling the dollar.

On the 5-minute timeframe on Thursday, two trading signals were formed. During the night, the pair broke through the 1.3369-1.3377 area from below to above, and during the European trading session, it moved from above to below this area. The first signal was not worth trading, as a critical line lay 20 pips above. The second signal could have been executed as a short position, yielding a 25-pip profit by the end of the day.

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, which represent the net positions of commercial and non-commercial traders, frequently cross each other and are mostly close to the zero mark. Currently, the lines are moving apart, with non-commercial traders still predominantly holding... sell positions. Given the events in the Middle East, it is not surprising that demand for riskier currencies is low.

In the long term, 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, and Trump's policies are aimed directly and indirectly at weakening the American currency. However, geopolitical factors are currently taking precedence, which have recently provided strong support for the dollar. Since the conflict in the Middle East is not yet resolved, the US dollar may still see further growth. According to the latest COT report (dated June 2), the "Non-commercial" group closed 4,300 BUY contracts and 13,500 SELL contracts. Consequently, the net position of non-commercial traders increased by 9,200 contracts over the week.

Analysis of GBP/USD 1H

On the hourly timeframe, the GBP/USD pair has completed its upward trend due to renewed tensions around the Strait of Hormuz and in US-Iran relations. The macroeconomic and fundamental background continues to have little impact on the pair's movements (with rare exceptions). We do not believe that, without a real escalation of the conflict in the Middle East, the dollar can show a strong trend, but the market is currently finding it psychologically difficult to sell the American currency.

For June 12, we identify the following important levels for trading: 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, 1.3751-1.3763. The Senkou Span B (1.3396) and Kijun-sen (1.3396) lines may also serve as signal sources. It is recommended to set the Stop Loss at breakeven when the price moves in the correct direction by 20 pips. The Ichimoku indicator lines may shift throughout the day, which should be considered when determining trading signals.

On Friday, the UK is scheduled to release monthly GDP and industrial production data for April. These are secondary data in the current circumstances, as is the University of Michigan consumer sentiment index in the US.

Trading Recommendations:

Today, traders may consider short positions targeting 1.3179-1.3187 if the price consolidates below the 1.3301-1.3309 area. Long positions will become relevant if there is a bounce from the 1.3301-1.3309 area, targeting 1.3369-1.3377.

Notes on Illustrations:

• Price levels of support and resistance are thick red lines near which movement may end. They are not sources of trading signals.
• The Kijun-sen and Senkou Span B lines are lines from the Ichimoku indicator shifted to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extremum levels are thin red lines from which the price 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 size of the net position of each category of traders.