GBP/USD 5-Minute Chart Analysis

On Friday, the GBP/USD pair experienced a minor pullback, but by the end of the day, it had recovered most of its losses. While the euro appears on the verge of canceling a barely-started bullish reversal, the pound remains confidently within its emerging upward trend. Late on Friday, the price bounced off the Senkou Span B line—a critical signal that the market is ready to continue buying. There were no notable macroeconomic events on Friday.

Therefore, we continue to expect more upward movement from the British pound. None of the global fundamentals support the U.S. dollar at this point. The situation for the greenback continues to deteriorate each week: Trump keeps introducing and raising tariffs, the Federal Reserve prepares for two or three rounds of monetary easing, the Bank of England has paused its policy changes indefinitely, and the U.S. government shutdown is ongoing and may break historical records in duration.

On the 5-minute timeframe, Friday generated a fair number of signals—most of which turned out to be false. Traders had a chance to work with the first two, both near the 1.3420 level. The price initially bounced off this area and then broke through it. However, in both cases, the price failed to follow through as expected. Later in the day, a clean bounce from the Senkou Span B line offered a recovery opportunity, which helped offset early trade losses.

COT Report

COT (Commitment of Traders) reports for the British pound continue to show fluctuations in trader sentiment. The red and blue lines representing net positions of commercial and non-commercial traders have been crossing frequently, usually hovering around the zero line. Currently, they're nearly equal, indicating a roughly balanced number of long and short positions.

The U.S. dollar continues to weaken under Donald Trump's policies, so market makers' demand for the pound becomes secondary. The trade war will likely persist in one form or another, and the Fed is expected to continue cutting rates into 2025. In this environment, dollar demand will remain soft.

According to the latest report on the British pound, the "Non-commercial" group opened 3,700 new BUY contracts and closed 900 SELL contracts, increasing the net long position by 4,600 contracts.

The pound has posted substantial gains throughout 2025, but let's be clear: this is mainly due to Trump's influence on the markets. Once that influence fades—or is counterbalanced—the dollar might rebound. But nobody can say precisely when that will happen. Regardless of fluctuations in net positions, dollar positioning continues to fall—typically at a quicker pace than for sterling.

GBP/USD 1-Hour Chart Analysis

On the H1 chart, the GBP/USD pair has finally ended its downtrend and begun forming a new bullish trend. There are still no fundamental justifications for dollar strength, so we expect the pair to move higher toward the 2025 highs under almost any scenario. The only caveat would be if consolidation on the daily timeframe continues over the next few months. But already now, it's clear: the trade war is intensifying, sentiment is deteriorating, and the Fed is inclined toward policy easing. This all creates a toxic mix for the U.S. dollar.

For October 20, important technical levels include: 1.3125, 1.3212, 1.3307, 1.3369–1.3377, 1.3420, 1.3533–1.3548, 1.3584, 1.3681, 1.3763, 1.3833, 1.3886. The key Ichimoku levels are as follows: Senkou Span B at 1.3393 and Kijun-sen at 1.3358. Stop Loss should be moved to breakeven after 20 pips in a favorable direction. Note that Ichimoku lines can shift during the day, so traders should update levels as needed throughout the session.

On Monday, there are no notable events outside the U.K. However, the U.S. will release data on Durable Goods Orders. Since much of U.S. macro data is delayed due to the shutdown, this report may generate above-average market response.

Trading Recommendations:

Today, traders can focus on levels around 1.3420 or the Senkou Span B line. There's sufficient support below, and with few scheduled events, technicals may dominate price action. The pound has begun a recovery, and in the short term, we expect this bullish momentum to extend toward the 1.3533–1.3548 area.

Chart Key:

• Thick red lines: resistance/support levels where price tends to shift direction; not necessarily sources of trading signals.
• Kijun-sen and Senkou Span B: Ichimoku lines transferred from the H4 chart to H1, used as strong dynamic support/resistance.
• Thin red lines: previous swing highs/lows (extremes) that may generate trade signals.
• Yellow lines: trendlines, channels, and technical patterns used in broader market structure.
• COT Indicator 1: reflects net position size for each trader group as tracked in the Commitments of Traders report.