Trading Recommendations and Trade Analysis for GBP/USD on August 19. The Pound Unfazed by Unemployment

The GBP/USD currency pair experienced a slight correction on Tuesday, but volatility remained minimal, similar to that of the EUR/USD pair. Overall, the British pound had more reasons to move during the day, particularly to decline. In the morning, reports on unemployment, changes in the number of unemployed, and wages were released in the UK. We won't consider the last two reports, as they are far from being the most significant, and the market is currently ignoring almost all reports that do not fall under the "extremely important" category. Therefore, we will focus only on the unemployment rate. The market had expected the rate to decrease to 4.8%, but in reality, it remained unchanged at 4.9%. Should this dishearten buyers of the pound? In our opinion, no. However, the actual value of the report was formally worse than the forecasts, providing grounds for a decline in the British currency. Nevertheless, even this report failed to shake the market, which is clearly in wait-and-see mode ahead of inflation data due this morning. Recall that inflation significantly influences the Bank of England's position on monetary policy.

From a technical standpoint, the British pound continues to develop its upward trend on the hourly timeframe, as indicated by the trend line. In the long term, the pair is in a sideways channel and continues to move from the lower boundary to the upper. Thus, the nearest target is at 1.3588, but this level does not appear to be a "final stop." The dollar may experience periodic corrections, but we do not expect any significant strengthening.

On the 5-minute timeframe on Tuesday, one buy trading signal was formed, which may develop today. During the European trading session, the price bounced twice off the Kijun-sen line, allowing traders to open long positions. Due to low volatility throughout the day, the pound was unable to move up by even 20 pips.

COT reports for the British pound show that for several months now, non-commercial traders have dominated the market with selling positions. The net position remains negative, despite the long-term upward trend. Given the events in the Middle East, it is not surprising that demand for riskier currencies remains weak. The war is formally over, but the conflict persists. Geopolitics may support demand for the U.S. dollar in the near term. However, we would not expect strong declines in the pair until it consolidates below the trend line.

In the long term, the dollar will continue to decline due to Donald Trump's policies, as clearly seen on the weekly timeframe. The trade war will continue in one form or another for a long time, and Trump's policies are aimed directly and indirectly at weakening the U.S. currency. The long-term upward trend remains, as indicated by the trend line. The price has recently interacted with this line and has bounced off it. According to the latest COT report (dated August 11), the "Non-commercial" group opened 10,300 BUY contracts and 8,600 SELL contracts. Thus, the net position of non-commercial traders increased by 1,700 contracts over the week.

On the hourly timeframe, the GBP/USD pair continues to form an upward trend, as indicated by the trend line. In the long term, both European currencies still "look" bullish and have been trading within sideways channels for an entire year. This does not negate the upward trend that began back in 2022. We expect the British pound to continue its growth in the coming weeks. The upward trend will be interrupted if the price settles below the trend line.

For August 19, 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 (1.3471) and the Kijun-sen line (1.3520) may also serve as sources of signals. It is recommended to set the stop-loss to break even when the price moves in the correct direction by 20 pips. The Ichimoku indicator lines may shift throughout the day, which should be taken into account when determining trading signals.

On Wednesday, the UK will release the July inflation report, which can rightly be considered the most important event of the week. In reality, traders should not expect a dramatic market reaction, as the market is focusing more on macroeconomic data from overseas and broader global events. Nevertheless, there may be a reaction to the consumer price index, especially if the actual figure deviates significantly from the forecast.

Today, traders may open short positions targeting 1.3465-1.3480 if the price settles below the Kijun-sen line. Long positions can be opened on a price rebound from the critical line, targeting 1.3588.