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The GBP/USD currency pair also traded higher on Thursday, and by the end of the day, it broke above the Senkou Span B line. Thus, there is a high probability of further growth for the British currency. Recall that earlier in the week, the pair also broke above the descending trendline, so the trend at this time is upward. The market, completely understandably, ignored Donald Trump's cancellation of tariffs on the UK and the EU, because traders have grown tired of the constant "swings." The level of instability and uncertainty in America is off the charts, and traders increasingly prefer to deal with more stable assets and currencies.
In the UK, there was no macroeconomic or fundamental background yesterday. The event of the day was the achievement of agreements regarding Greenland, but many questions remain unanswered. For instance, as of now, it is unclear how Denmark feels about the deal between Rutte and Trump. We do not believe that this story has reached a conclusion, and any new attempts by Trump regarding Greenland provide the market with a reason to sell the U.S. dollar to avoid potential risks.
On the 5-minute timeframe, two buy signals formed yesterday, but identifying the first was very difficult. Throughout the Asian, European, and half of the American sessions, the price moved sideways exclusively in the range of 1.3415-1.3437, and only closer to the evening did it begin to rise. Thus, traders could open long positions from the critical line, but this decision was not the simplest.
COT reports for the British pound indicate that sentiment among commercial traders has been changing steadily in recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, regularly cross each other and are mostly close to the zero mark. Currently, the lines are approaching each other, with non-commercial traders dominating with... shorts. Recently, speculators have increased their long positions; therefore, a change in sentiment is likely soon, which is unlikely to significantly affect the GBP/USD pair.
The dollar continues to decline due to Donald Trump's policies, as shown on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time, and the Federal Reserve will, in any case, lower rates in the next 12 months. Demand for the dollar will decline one way or another. According to the latest COT report (dated January 13) for the British pound, the "Non-commercial" group opened 2,500 BUY contracts and closed 2,700 SELL contracts. Thus, the net position of non-commercial traders increased by 5,200 contracts over the week.
In 2025, the pound rose quite significantly, but it should be understood that there is one reason: Donald Trump's policy. Once this reason is neutralized, the dollar may begin to rise, but when that will happen is anyone's guess.
On the hourly timeframe, the GBP/USD pair has also transitioned to forming an upward trend and has broken above the Senkou Span B line. Thus, we believe that the British pound is targeting last year's highs. The fundamental and macroeconomic background fully supports this scenario, and the market has been correcting and building strength for a new upswing for 6 months.
For January 23, we highlight the following important levels: 1.3042-1.3050, 1.3096-1.3115, 1.3201-1.3212, 1.3307, 1.3369-1.3377, 1.3437, 1.3533-1.3548, 1.3615, 1.3681, 1.3763. The Senkou Span B line (1.3478) and the Kijun-sen line (1.3418) may also serve as sources of signals. It is recommended to set the Stop Loss level to break-even if the price moves in the correct direction by 20 pips. The Ichimoku indicator lines may move throughout the day, which should be taken into account when determining trading signals.
On Friday in the UK and the US, the release of the activity indices for the services and manufacturing sectors for January is scheduled. Additionally, retail sales in the UK and the U.S. consumer sentiment index will be published. Collectively, this data may influence the pair's movement in the morning and in the afternoon.
Today, traders may consider new short positions with a target at 1.3437 if the price consolidates below the Senkou Span B line or bounces off the 1.3533-1.3548 area. Long positions remain relevant with a target in the area of 1.3533-1.3548. A breakout above this area will open the way to 1.3615.
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