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The GBP/USD pair on Monday neither continued its decline nor began a meaningful rise. Volatility during the first trading day of the week was predictably low, so we saw no interesting moves. Moreover, no notable events or releases occurred in the UK or the US during the day, so the market had nothing to react to. The downtrend persists, as shown by the trend line, so technically sterling has everything it needs in the short term to continue falling. Will such a move be justified? In our view, probably not. The market continues to focus only on factors that support the dollar and ignores the rest. The Bank of England may also tighten policy in the coming months, likely at least twice as well as the Federal Reserve, but the mere "may tighten" narrative has repeatedly supported the dollar rather than the pound.
On the 5-minute timeframe on Monday, three trading signals formed — all weak and false due to the extremely low volatility during the day. From low to high, the pair moved no more than about 40 pips. With such low volatility, expecting profits from any intraday signals is unrealistic.
On the hourly timeframe, GBP/USD continues a downward trend that has become a full-blown move. The fundamental backdrop for the dollar and the pound changed sharply last week as the Fed signaled readiness to continue tightening monetary policy. As a result, the dollar's outlook for the second half of 2026 looks materially more favorable again. However, the dollar has no other supporting factors.
On Tuesday, novice traders may consider short positions targeting 1.3319–1.3331, since price closed below the 1.3380–1.3386 area. Open long positions targeting 1.3456–1.3476 if price settles above the 1.3380–1.3386 zone.
On the 5-minute timeframe, you can trade the levels 1.3259–1.3267, 1.3319–1.3331, 1.3380–1.3386, 1.3456–1.3476, 1.3587–1.3598, 1.3631–1.3641, 1.3695, 1.3741. No major events or releases are scheduled in the UK or the US on Tuesday either; meaningful economic information will start arriving no earlier than Wednesday. Therefore, we can expect a "boring Monday" repeat today.
Price levels (areas) of support and resistance serve as targets for opening buy or sell trades or as sources of signals.
Red lines indicate channels or trend lines that show the current trend and the preferred trading direction.
The MACD indicator (14,22,3) — the histogram and signal line — is an auxiliary indicator that can also provide signals.
Important speeches and reports (listed in the news calendar) can significantly influence currency pair movements. Therefore, during their release, traders should approach trading with utmost caution, or exit the market to avoid sudden reversals against the preceding move.
Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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