06.08.202604:52 Forex Analysis & Reviews: Trading Recommendations and Trade Review for GBP/USD on August 6. The Dollar Continues to Slide

Analysis of GBP/USD 5M

The GBP/USD currency pair continued modest upward movement on Wednesday, which is entirely natural. Yesterday, both U.S. reports (which, incidentally, were not super important) came in below forecasts, adding pressure on the dollar. Of course, the market will not draw final conclusions from the ADP and ISM reports, as there are now more important indicators that directly affect Federal Reserve monetary policy. Tomorrow, NonFarm Payrolls and the unemployment rate will be released, and next week — the inflation report. These data allow forecasting the Fed's decision on the key rate in September. Recall that two months ago the market prematurely concluded that Fed tightening was inevitable. We now observe a fully justified rise in the British pound as the pair's price adjusts toward fair value. In addition, higher timeframes show a flat yearly trend, and the price continues to move from the lower boundary of the sideways channel toward the upper boundary. In our view, the Bank of England in 2026 has a much higher chance of tightening monetary policy, since it is not under pressure from Donald Trump to demand rate cuts regardless of macroeconomic data.

Technically, the pound continues to form an upward trend. It should be recalled that in the long term the pair is in a range, clearly visible on the weekly TF. After working off the lower boundary of the sideways channel, a logical move toward the upper boundary began, which is not yet complete and may continue for several weeks.

On the 5-minute TF on Wednesday, no trading signals were formed. During the European session, the pair reached the area 1.3465–1.3480, but during the rest of the day it failed to generate a trading signal. Expect a signal to form today.

COT Report

COT reports for the pound show that non-commercial traders have dominated the market with short positions for several months. The net position is negative despite the long-term uptrend remaining intact. Given events in the Middle East, it is unsurprising that demand for risk currencies remains weak. The war is formally over, but the conflict continues. Geopolitics may support demand for the U.S. dollar in the near term. However, until consolidation below the trendline occurs, we would not expect a strong drop in the pair.

In the long term, the dollar will continue to decline due to Trump's policies, as seen on the weekly TF (illustration above). The trade war will continue in one form or another for a long time, and Trump's policies are directed, both directly and indirectly, at weakening the U.S. currency. The long-term uptrend remains, evidenced by the trendline. The price recently tested that line and bounced. According to the latest COT (July 28), the "Non-commercial" group closed 2,800 BUY contracts and opened 6,400 SELL contracts. Thus, the net position of non-commercial traders decreased by another 9,200 contracts over the week.

Analysis of GBP/USD 1H

On the hourly TF, the GBP/USD pair continues to form an upward trend. In the long term, both European currencies still look set to move higher and have been in sideways channels for a full year. This does not negate the uptrend that began in 2022. We expect the pound to continue rising in the coming weeks, regardless of geopolitical and economic developments. This week, only U.S. labor market data could hinder further gains for the pound.

For August 6 we highlight the following important levels: 1.3042–1.3050, 1.3096–1.3115, 1.3179–1.3187, 1.3301–1.3309, 1.3369–1.3377, 1.3465–1.3480, 1.3588, 1.3671–1.3681. The Senkou Span B line (1.3388) and Kijun-sen (1.3453) may also serve as signal sources. It is recommended to move Stop Loss to breakeven after the price moves 20 pips in the favorable direction. Ichimoku lines may shift during the day and should be taken into account when determining trading signals.

On Thursday, the UK economic calendar is empty, while the U.S. will publish only the jobless claims report. This is an absolutely secondary report that should not elicit a market reaction. Most likely, volatility will again be low today.

Trading recommendations:

Today, traders may open new short positions with a target of 1.3388 if the price bounces off the 1.3465–1.3480 area. Long positions can be opened if the 1.3465–1.3480 area is broken, targeting 1.3588.

Explanations for the illustrations:

• Support and resistance price 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 TF from the 4-hour TF. They are strong lines.
• Extremum levels — thin red lines from which price previously bounced. They are sources of trading signals.
• Yellow lines — trend lines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts — the size of the net position of each trader category.