The GBP/USD pair continued to rise on Tuesday, though with less strength compared to EUR/USD. The hourly chart confirms that the uptrend remains intact, supported by the trendline. UK economic data released yesterday came in exactly as expected, offering no real momentum for the pound. Similarly, strong US data should have supported the dollar but failed to stop its decline.
The dollar still faces heavy fundamental pressure. This week’s focus is on the Federal Reserve and Bank of England meetings, both of which are likely to favour the pound. Traders expect a rate cut from the Fed and a continued pause from the BoE, outcomes that strengthen the pound’s outlook. On the daily chart, GBP/USD shows signs of resuming upward momentum after a correction within the broader uptrend.
On the 5-minute chart, one clear trading signal appeared on Tuesday. At the start of the European session, GBP/USD broke above 1.3615, triggering a long position and leading to further gains through the day.
COT reports show that commercial traders’ sentiment in the pound shifts frequently, with long and short positions balanced. For now, this factor is less important as dollar weakness dominates the market. The latest report indicates that non-commercial traders closed more longs than shorts, reducing the net position slightly. However, broader dollar weakness tied to US policy remains the key driver of pound strength.
GBP/USD 1-Hour Chart Analysis
On the hourly timeframe, GBP/USD is in the process of forming a new uptrend. With fundamentals still working against the dollar, medium-term growth for the US currency looks unlikely. A technical pullback in GBP/USD is possible, but it would require a clear break of the trendline.
Key levels to watch on September 17 are 1.3125, 1.3212, 1.3369–1.3377, 1.3420, 1.3525–1.3548, 1.3615, 1.3681, 1.3763, 1.3833, and 1.3886. The Ichimoku lines, Senkou Span B at 1.3460 and Kijun-sen at 1.3581, also serve as important reference points. Stop Loss should be adjusted to breakeven once the trade gains more than 20 pips to protect against reversals.
Market Events to Watch
On Wednesday, the UK inflation report will be published, though it is unlikely to change the BoE’s policy direction. A stronger reading could, however, add momentum to pound buying. In the US, the Fed’s decision and Jerome Powell’s press conference are expected to drive volatility in the evening.
Trading Recommendations
The outlook for GBP/USD remains bullish, with potential targets at 1.3681 and 1.3763. Long positions remain the preferred choice, while shorts carry higher risk and are not advisable at this stage.
