empty
31.01.2025 03:48 AM
Trading Recommendations and Analysis for GBP/USD on January 31: The British Pound Has Moved Into a Flat Trend

GBP/USD 5-Minute Analysis

This image is no longer relevant

On Thursday, the GBP/USD currency pair exhibited unusual and illogical trading behavior. The British pound had relatively little macroeconomic data and fewer fundamental events throughout the day, yet it closely mirrored the movements of the euro, which highlights the strong correlation between the two currencies. However, the euro managed to generate one decent signal and demonstrated average volatility, while the pound sterling did not show any significant movement.

No reports were published in the UK on Thursday, and the Bank of England meeting is scheduled for next week. We still believe that the British currency has sufficient reasons to resume its medium-term downtrend, but currently, a correction is ongoing and may continue for several more weeks. It is important to remember that our expectations are based on the technical analysis of the daily timeframe, where the pound has decreased almost without any correction for three months. A stronger correction would be logical at this point. However, on the hourly timeframe, this correction may manifest as a series of trends. Regardless, even on the hourly timeframe, there are still no indications suggesting a decline in the British currency. Meanwhile, this week, the GBP/USD pair has been trading within a flat range.

From a trading signals perspective, we can observe two rebounds from the 1.2429–1.2445 area. In the first instance, the price struggled to rise even 20 pips, while in the second, the signal emerged so rapidly that it was difficult to react in time. Additionally, a day earlier, two false signals were also generated in this same area. The main concern, however, is not with the area itself but with the nature of the British pound's movement this week.

COT Report

This image is no longer relevant

The Commitment of Traders (COT) reports for the British pound indicate that commercial traders' sentiment has fluctuated consistently over recent years. The red and blue lines in the reports, which represent the net positions of commercial and non-commercial traders, frequently intersect and typically remain close to the zero mark. Currently, these lines are near each other, suggesting that the number of buy and sell positions is roughly equal.

On the weekly timeframe, the price initially broke through the 1.3154 level but then retraced back to the trendline, which it successfully breached. This break of the trendline strongly indicates that the decline of the pound is likely to continue. However, there has also been a rebound from the previous local low on the weekly chart, which could point to a range-bound market.

According to the latest COT report, the non-commercial group has closed 4,800 buy contracts and opened 3,800 sell contracts. This resulted in a decrease of 8,600 contracts in the net position of non-commercial traders, which is not a positive sign for the pound.

The fundamental outlook does not provide any justification for long-term purchases of the British pound, and the currency remains at risk of continuing its global downward trend. Consequently, the net position may continue to decline, signaling a further reduction in demand for the British pound.

GBP/USD 1-Hour Analysis

This image is no longer relevant

On the hourly timeframe, the GBP/USD pair continues to exhibit a local upward trend. Nevertheless, we still do not see any factors that could support the pound sterling's growth in the long term. In the short term, however, the trend is upward, suggesting that long positions should be considered on lower timeframes. Conversely, on higher timeframes and for the long-term outlook, we do not recommend taking long positions. A decline in the pound sterling could begin soon, with the first trendline as the target, but this week, the market movement has predominantly been flat.

For January 31, we highlight the following important levels: 1.2052, 1.2109, 1.2237-1.2255, 1.2349, 1.2429-1.2445, 1.2511, 1.2605-1.2620, 1.2691-1.2701, 1.2796-1.2816. The Senkou Span B line (1.2340) and the Kijun-sen line (1.2407) may also serve as sources of signals. The Stop Loss level is recommended to be set at breakeven if the price moves 20 pips in the right direction. The Ichimoku indicator lines may shift throughout the day, which should be considered when identifying trading signals.

On Friday, there are no significant events scheduled in the UK once again. In the US, the only relatively important data release is the Personal Consumption Expenditures (PCE) Price Index. Some experts regard this index as highly significant, calling it the "Fed's favorite inflation gauge." However, we do not share this perspective. This week, there has been no noticeable reaction to much more important events.

Illustration Explanations:

  • Support and Resistance Levels (thick red lines): Thick red lines indicate where movement may come to an end. Please note that these lines are not sources of trading signals.
  • Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the 4-hour timeframe to the hourly timeframe. These are strong lines.
  • Extreme Levels (thin red lines): Thin red lines where the price has previously bounced. These serve as sources of trading signals.
  • Yellow Lines: Trendlines, trend channels, or any other technical patterns.
  • Indicator 1 on COT Charts: Represents the net position size for each category of traders.
Paolo Greco,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

GBP/USD: Trading Plan for the U.S. Session on February 24th (Analysis of Morning Trades)

In my morning forecast, I focused on the 1.2628 level as a key decision point for market entry. Looking at the 5-minute chart, we can see that a false breakout

Miroslaw Bawulski 15:51 2025-02-24 UTC+2

EUR/USD: Trading Plan for the U.S. Session on February 24th (Analysis of Morning Trades)

In my morning forecast, I focused on the 1.0495 level as a key decision point for market entry. Looking at the 5-minute chart, we can see that the price dropped

Miroslaw Bawulski 15:46 2025-02-24 UTC+2

How to Trade the EUR/USD Pair on February 24? Simple Tips and Trade Analysis for Beginners

Analysis of Friday's Trades 1H Chart of EUR/USD On Friday, the EUR/USD currency pair exhibited sluggish movement, as if it were doing someone a favor. The macroeconomic background was notably

Paolo Greco 06:02 2025-02-24 UTC+2

How to Trade the GBP/USD Pair on February 24? Simple Tips and Trade Analysis for Beginners

Analysis of Friday's Trades 1H Chart of GBP/USD The GBP/USD pair experienced a slight decline on Friday, reflecting a mixed macroeconomic backdrop for both the pound and the euro

Paolo Greco 06:02 2025-02-24 UTC+2

Trading Recommendations and Analysis for GBP/USD on February 24: The British Pound Has Run Out of Luck

On Friday, the GBP/USD currency pair experienced a downward movement following a sharp rise on Thursday. It's important to note that there were no fundamental reasons to buy the British

Paolo Greco 02:13 2025-02-24 UTC+2

Trading Recommendations and Analysis for EUR/USD on February 24: Is the Euro Preparing for a New Decline?

On Friday, the EUR/USD currency pair experienced a downward pullback after a significant rise on Thursday. Notably, there were no major economic reports or events in the Eurozone

Paolo Greco 02:12 2025-02-24 UTC+2

GBP/USD: Trading Plan for the U.S. Session on February 21st (Review of Morning Trades)

In my morning forecast, I focused on the 1.2640 level as a key decision point. Looking at the 5-minute chart, a false breakout at this support level provided a solid

Miroslaw Bawulski 16:24 2025-02-21 UTC+2

EUR/USD: Trading Plan for the U.S. Session on February 21st (Review of Morning Trades)

In my morning forecast, I focused on the 1.0475 level as a key entry point. Looking at the 5-minute chart, we can see that a false breakout at this level

Miroslaw Bawulski 16:17 2025-02-21 UTC+2

How to Trade the GBP/USD Pair on February 21? Simple Tips and Trade Analysis for Beginners

Analysis of Thursday's Trades 1H Chart of GBP/USD The GBP/USD pair traded higher on Thursday, even though there weren't any fundamental or macroeconomic reasons for this increase. Earlier

Paolo Greco 06:44 2025-02-21 UTC+2

How to Trade the EUR/USD Pair on February 21? Simple Tips and Trade Analysis for Beginners

Analysis of Thursday's Trades 1H Chart of EUR/USD The EUR/USD currency pair continued to exhibit extremely low volatility on Thursday, primarily influenced by technical factors. After failing to break through

Paolo Greco 06:44 2025-02-21 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.