The GBP/USD currency pair continued its downward movement on Tuesday, with a significant drop in the morning. Is it worth mentioning that there were no important macroeconomic reports or fundamental events on Tuesday in either the UK or the US? The British pound simply continues to fall every day. If there are formal reasons for this, great; if not, it doesn't matter. We believe that Tuesday's movements are, in some sense, a response to all market participants who consider the current rise in the dollar justified.

In the past 4-5 weeks, many events have been interpreted by the market as negative for the British currency and positive for the US dollar. In general, absolutely any report or event can be "twisted" to explain movements in either direction. The Fed lowered the key rate? — The Fed not only had to reduce the rate but also promise easing at the next three meetings! The Bank of England kept the rate unchanged. — It should have raised it! The US has been in a "shutdown" for 35 days. — It doesn't affect anything! The trade war continues, and tariffs are being imposed with alarming regularity. — But Donald Trump and China signed a temporary truce!

In other words, absolutely any event can be manipulated to explain some movement post-factum. But on Tuesday, there was nothing to manipulate, and the US dollar still rose.

In recent articles, we have repeatedly drawn traders' attention to the flat on the daily timeframe and warned about a potential liquidity withdrawal from the minimum of August 1, which could serve as a starting point for a new round of upward trend. However, at this point, we can confidently say that this hypothesis has not been confirmed. For several days, the pair's quotes hesitated around the 1.3140 low, then continued to fall. Neither technical patterns nor fundamental and macroeconomic factors are working now.

It's also worth mentioning that the US labor market remains in a deplorable state. A new ADP report is due today —the only report traders and the Fed can rely on. Last month, a negative figure was recorded for the first time in four years, and a growth of 20-24,000 jobs is projected for October. In fact, a growth of 24,000 jobs is nothing. A normal Nonfarm number typically falls between +150-200,000 per month. It is at this level that the country's unemployment rate does not increase. However, if the actual ADP figure is, say, +30,000, it will be yet another formal reason for the American currency to rise.

Today, the ISM business activity index for the US services sector will also be released, but we do not expect this indicator to trigger a decline in the dollar. On Monday, an analogous index for the manufacturing sector was released, which came in below forecasts, below last month, and below the "waterline" of 50.0. This report did not have any negative influence on the dollar's exchange rate.

The average volatility of the GBP/USD pair over the last five trading days is 95 pips. For the pound/dollar pair, this value is considered "average." On Wednesday, November 5, we expect movement within the range between 1.2949 and 1.3138. The upper linear regression channel is directed downwards, but only due to the 4-month flat. The CCI indicator has entered oversold territory four times, signaling a potential resumption of the upward trend.

Nearest Support Levels:

S1 – 1.2939

S2 – 1.2817

S3 – 1.2695

Nearest Resistance Levels:

R1 – 1.3184

R2 – 1.3306

R3 – 1.3428

Trading Recommendations:

The GBP/USD currency pair is attempting to resume its 2025 upward trend, and its long-term prospects have not changed. Donald Trump's policy will continue to exert pressure on the dollar, so we do not expect the American currency to appreciate. Currently, the daily timeframe is still flat. Thus, long positions with targets at 1.3672 and 1.3733 remain much more relevant when the price is above the moving average. When the price is below the moving average line, small short positions can be considered with targets at 1.2949 and 1.2939 on technical grounds. From time to time, the American currency shows corrections, but for the trend to strengthen, it needs real signs of an end to the trade war or other global positive factors.

Explanations for Illustrations:

• Linear regression channels help determine the current trend. If both are directed in the same way, it indicates that the trend is currently strong.
• The moving average line (settings 20,0, smoothed) determines the short-term trend and the direction in which trading should currently be conducted.
• Murray levels are target levels for movements and corrections.
• Volatility levels (red lines) indicate the likely price channel the pair will trade in over the coming days, based on current volatility indicators.
• The CCI indicator entering the oversold territory (below -250) or the overbought territory (above +250) indicates that a trend reversal in the opposite direction is approaching.