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20.08.2025 03:38 AM
The GBP/USD currency pair on Tuesday generally maintained the downward tendency of recent days. Unlike EUR/USD, GBP/USD is showing at least some movement. Naturally, this movement is corrective. A consolidation below the ascending trendline has occurred, but as we mentioned yesterday, practically any correction or pullback would have broken this line. This is not an indicator, and we do not believe the trend has shifted to bearish. The price remains above the Kijun-sen line. Even if it breaks through, there is still the strong Senkou Span B line below. Meanwhile, the dollar lacks support from its macroeconomic or fundamental background, as there is none.
Thus, despite the recent decline in the pair's quotes, we do not consider this a new trend, and at this point, short positions should not be considered. It seems that nothing will change in the market until Jerome Powell's speech on Friday. This morning in the UK, an important inflation report will be published, but traders' reaction to it may be short-lived.
As with the euro, several trading signals formed on the 5-minute TF, but each turned out to be false. Movements are extremely weak, volatility is low, and the downward move is just a shallow correction. Moreover, the correction is as close to flat as possible. Levels and lines are currently not functioning as they should.
COT reports on the British pound show that in recent years, the sentiment of commercial traders has constantly shifted. The red and blue lines, which represent the net positions of commercial and non-commercial traders, frequently intersect and, in most cases, remain near the zero mark. At present, they have nearly converged again, indicating a roughly equal number of long and short positions.
The dollar continues to decline due to Trump's policies, so the demand of market makers for the pound is not particularly important right now. The trade war will continue in one form or another for a long time. Dollar demand will continue to decline. According to the latest report on the British pound, the "non-commercial" group opened 8,100 BUY contracts and 13,900 SELL contracts. Thus, the net position of non-commercial traders declined by another 5,800 contracts during the reporting week.
In 2025, the pound rose sharply, but it should be understood that there is only one reason: Trump's policy. Once this factor is neutralized, the dollar could move into growth, but no one knows when that will happen. It does not matter much how fast the net position for the pound grows or falls. The dollar is falling regardless, usually at a faster pace.
On the hourly timeframe, GBP/USD continues forming an upward trend, while on the daily TF, it bounced off the important and strong Senkou Span B line. From our perspective, the fundamental background still does not favor the U.S. currency, so in the long term, we expect the continuation of the "2025 trend." Producer inflation has slightly brightened the dollar's gloomy days, but bears are unlikely to maintain momentum for long. The dollar may only count on growth within purely technical corrections.
For August 20, we highlight the following key levels: 1.3125, 1.3212, 1.3369–1.3377, 1.3420, 1.3509, 1.3615, 1.3681, 1.3763, 1.3833, 1.3886. The Senkou Span B line (1.3426) and the Kijun-sen line (1.3494) may also act as signal sources. It is recommended to set the Stop Loss to breakeven once the price moves 20 pips in the right direction. Ichimoku indicator lines may shift during the day, which should be considered when identifying trading signals.
On Wednesday, the UK will publish the first more or less important report of the week—inflation. It is expected that the consumer price index in the UK will accelerate slightly further to 3.7–3.8%. And 3.8% is already nearly 4%. And 4% is twice the Bank of England's target level. Therefore, it is unlikely that monetary policy easing should be expected in Britain anytime soon.
We believe that on Wednesday, the market will continue to show sluggish movements with minimal volatility, very close to flat. After the break of the trendline, we do not consider the trend to have shifted to bearish. A downward correction is possible, but we do not believe that now is the time to sell the pound sterling.
