Analysis GBP/USD 5M

The GBP/USD pair plunged like a stone on Wednesday for no apparent reason. Yet overnight, the pound, along with the euro, recovered more strongly than it fell yesterday. Thus, the illogical downtrend we have seen over the past month to month-and-a-half has likely ended. Recall that yesterday's US inflation report triggered a fresh strong rally in the US currency. However, no fundamentals justified such a move, since a marginally higher inflation reading does not change the Federal Reserve's outlook toward materially more hawkish policy. In any case, the market had already priced in the equivalent of five Fed tightenings instead of the at-most two that are realistic. We repeatedly warned about the illogical nature of the pair's decline and stressed that a long-term uptrend remains in place. On the daily timeframe, yesterday price removed liquidity at the lower boundary of the sideways channel, updating the prior low by only three pips. We have repeatedly noted that price sits near the lower edge of three overlapping sideways channels. Now the pound has everything it needs to start a new leg of the uptrend that began back in 2022.

Technically, the pound has continued to form a downward trend, but it is most likely complete. A break above the Ichimoku lines will confirm GBP/USD's transition to an uptrend that, barring another flock of "black swans," could be prolonged and powerful.

On the 5-minute timeframe, three trading signals formed on Wednesday. During the US session, price first cleared the 1.3245–1.3248 area and then moved through 1.3179–1.3187, giving traders opportunities to book at least small profits. By the end of the day, the pair closed above 1.3179–1.3187, and this morning it reached the first target at 1.3245–1.3248. We believe the rally will continue.

COT Report

COT reports for the pound show that non-commercial traders have dominated on the sell side for several months. The net position is negative, despite the preservation of the long-term uptrend. Given events in the Middle East, it is unsurprising that demand for the dollar remains fairly high in 2026. The war between the US and Iran has been formally paused, but a new conflict has begun within Yemen. The Federal Reserve's shift in monetary policy stance also supports the dollar, and the uptrend line has been breached. However, it was breached within a flat, so we do not consider the uptrend finished.

In the long term, the dollar continues to decline due to Donald Trump's policies, which is clearly visible on the weekly timeframe. The trade war will continue in one form or another for a long time, and Trump's policies aim, directly and indirectly, to weaken the US currency. The long-term uptrend remains intact. According to the latest COT report (October 6), the "Non-commercial" group opened 3,800 BUY contracts and 10,400 SELL contracts. As a result, non-commercial traders' net position fell by 6,600 contracts over the week.

Analysis GBP/USD 1H

On the hourly timeframe, GBP/USD may be completing a downtrend that lasted a full month with no solid reason. On the daily and weekly timeframes, price cleared liquidity at previous lows and remained inside sideways channels. Thus, the pound could rise at least to 1.3650, the upper boundary of the daily-chart sideways channel. The pound's rise needs no more justification than the dollar's rise over the past month. Moves inside a flat rarely depend on fundamentals or macroeconomics.

For October 15 we highlight the following important levels: 1.3042–1.3050, 1.3096–1.3115, 1.3179–1.3187, 1.3248, 1.3301–1.3309, 1.3369–1.3377, 1.3465–1.3480, 1.3588, 1.3671–1.3681. Senkou Span B (1.3245) and Kijun-sen (1.3205) may also provide signals. It is recommended to move the stop loss to breakeven once price has moved 20 pips in the correct direction. Ichimoku lines may shift during the day and should be considered when defining trading signals.

Today the UK will publish GDP and industrial-production reports, which are unlikely to interest traders. In the US, somewhat more important reports on producer prices and retail sales will be released. We believe the pound should continue to rise.

Summary of the above analysis:

Traders may consider the 1.3179–1.3187 area as a target for short positions if price rebounds from the 1.3245–1.3248 area. A close above 1.3245–1.3248 would make the 1.3301–1.3309 area a target for long positions.

Explanations for the illustrations:

• Price support and resistance levels (resistance/support) — thick red lines around which movement may end. They are not sources of trading signals.
• Kijun-sen and Senkou Span B lines — Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extreme levels — thin red lines from which the price previously bounced. They are sources of trading signals.
• Yellow lines — trendlines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts — the size of the net position of each trader category.