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The GBP/USD pair continued to correct on Friday with minimal volatility, staying within the upward trend. Macroeconomic data from the US triggered a market reaction of only 25 pips, and the day's overall volatility was again minimal. In the UK, the macroeconomic and fundamental backdrop was absent. While we would like to say that the upcoming week will be defining for the market and that traders will wake up to strong trending movements, the likelihood of this is low.
Yes, the FOMC meeting is indeed a significant event. However, the market is already mentally prepared for a third consecutive rate cut. Therefore, the primary intrigue remains Jerome Powell's speech. Powell could adopt any position, as there is essentially no substantial basis for the Federal Reserve's conclusions. There are still no macroeconomic data available regarding the labor market, unemployment, and inflation. Thus, the Fed Chair could present a cautious stance (that macroeconomic data will inform future rate decisions), a dovish stance (that the labor market continues to decline and requires further easing), or a hawkish stance (that inflation is rising and rates cannot be cut further). Predicting movements for the upcoming week becomes nearly futile; everything will depend on the fundamentals.
From a technical perspective, the upward trend remains intact, suggesting continued growth in the British currency, which has unjustifiably fallen for two consecutive months.
On the 5-minute chart on Friday, no trading signals were formed, so there were no grounds for traders to open positions.
The COT reports for the British pound indicate that commercial traders' sentiment has been changing steadily in recent years. The red and blue lines indicating the net positions of commercial and non-commercial traders keep crossing and are mostly located near the zero mark. Currently, they are nearly at the same level, indicating a roughly equal number of long and short positions.
The dollar continues to decline due to Donald Trump's policies, as visible on the weekly timeframe (illustration above). The trade war will persist in one form or another for a long time. The Fed will continue to reduce rates in the next 12 months. The demand for the dollar will decline in any case. According to the latest COT report (from October 28), the "Non-commercial" group opened 7,000 buy contracts and 10,500 sell contracts. Consequently, the net position for non-commercial traders decreased by 3,500 contracts over the week. However, this data is outdated and holds little relevance.
In 2025, the pound rose significantly, but it is essential to understand that the cause was one: Donald Trump's policies. Once this cause is mitigated, the dollar may begin to rise, but nobody knows when that will happen. It does not matter how fast the net position for the pound is increasing or decreasing (if it is decreasing). The net position for the dollar is nonetheless declining, typically at a faster pace.
On the hourly timeframe, the GBP/USD pair continues to form an upward trend. We believe that growth in the medium term will continue, regardless of the current local macroeconomic and fundamental backdrop, and the correction on the daily timeframe will end sooner or later. Or it may already have concluded. However, much will depend on the US labor market, unemployment, and inflation data, which will determine the future vector of Fed monetary policy.
For December 8, we highlight the following important levels: 1.2863, 1.2981-1.2987, 1.3042-1.3050, 1.3096-1.3115, 1.3201-1.3212, 1.3307, 1.3369-1.3377, 1.3420, 1.3533-1.3548, 1.3584. The Senkou Span B line (1.3155) and Kijun-sen line (1.3279) may also serve as sources of signals. It is recommended to set Stop Loss orders to breakeven upon the price moving 20 pips in the correct direction. The Ichimoku indicator lines may shift during the day, which should be considered when determining trading signals.
On Monday, there are no significant events or releases scheduled in the UK or the US. Therefore, high volatility and strong movements are unlikely today. Most likely, we will face another "boring Monday."
Today, traders may consider selling if the price bounces again from the 1.3369-1.3377 area, with a target at 1.3307. Long positions will become relevant if there is a bounce from the level of 1.3307 with targets of 1.3369-1.3377 or if the price consolidates above the area of 1.3369-1.3377 with a target of 1.3420.
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