Trading Recommendations and Analysis of Deals on GBP/USD for January 29. The Pound Has Corrected and Is Waiting for News

[Ben Graham]

Analysis of GBP/USD 5M

The GBP/USD currency pair traded in a correction throughout Wednesday, unrelated to macroeconomic or fundamental factors. Recall that the day before, the US dollar collapsed by almost 200 pips due to new threats of tariff imposition/increase from Donald Trump. Shortly thereafter, the US president openly expressed joy over the dollar's decline over the past year, further upsetting traders who hurried to continue selling the American currency. On Wednesday, we witnessed a purely technical correction. In the evening, market volatility spiked again as the FOMC announced the results of its first meeting of the year. However, we believe that it will be necessary to summarize the meeting's results and assess the market's reaction today throughout the day. Overall, we believe that the FOMC's monetary policy is not currently the top priority for traders. News from the White House comes almost every day, provoking panic in the market. Yesterday, Trump announced the readiness to conduct a military operation in Iran if Tehran does not sign an agreement with the US soon... Thus, the market can very quickly forget about the FOMC meeting.

Technically, the British pound remains in an upward trend. It is so strong that it is difficult even to form a trend line. Today, it is necessary to evaluate the FOMC meeting results and conduct a new analysis of the technical picture.

On the 5-minute timeframe, two trading signals were formed on Wednesday. During the European trading session, the price bounced off the level of 1.3833 with minimal error, allowing traders to open short positions. During the American session, the nearest target, the level of 1.3763, was reached. Thus, the profit on shorts amounted to about 50 pips. The buy signal, in the form of a bounce from the 1.3763 level, was hardly worth trading a couple of hours before the FOMC meeting.

COT Report

COT reports on the British pound show that commercial traders' sentiment has been changing steadily over the past few years. The red and blue lines, representing the net positions of commercial and non-commercial traders, frequently intersect and are mostly located near the zero mark. Currently, the lines are approaching each other, with non-commercial traders dominating with... sell positions. Recently, speculators have increased their long positions, so a change in sentiment may occur soon, which should not particularly affect the GBP/USD pair.

The dollar continues to decline due to Donald Trump's policies, which are clearly visible on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time, and the FOMC will nevertheless lower rates in the next 12 months. Demand for the dollar will inevitably decrease. According to the latest COT report (as of January 20) on the British pound, the "Non-commercial" group opened 2,300 BUY contracts and closed 900 SELL contracts. Thus, the net position of non-commercial traders increased by 3,200 contracts over the week.

The pound rose quite significantly in 2025, but it should be understood that the reason is one: Donald Trump's policies. Once this reason is neutralized, the dollar may begin to grow, but no one knows when.

Analysis of GBP/USD 1H

On the hourly timeframe, the GBP/USD pair continues to form an upward trend. Thus, the British pound has reached last year's highs without much difficulty and is now poised to aim much higher. The fundamental and macroeconomic background fully supports this scenario, and the market has been correcting and accumulating strength for a new upward surge for six months.

For January 29, we highlight the following important levels: 1.3201-1.3212, 1.3307, 1.3369-1.3377, 1.3437, 1.3533-1.3548, 1.3615, 1.3671-1.3681, 1.3763, 1.3833, 1.3886, 1.3948. The Senkou Span B (1.3417) and Kijun-sen (1.3633) lines may also serve as sources of signals. It is recommended to set the Stop Loss to breakeven when the price moves in the correct direction by 20 pips. The lines of the Ichimoku indicator may shift during the day, which should be taken into account when determining trading signals.

On Thursday, no significant events or reports are scheduled in the United Kingdom or the United States, but Donald Trump will certainly "delight" the markets with news. In addition, traders may remain influenced by the FOMC meeting throughout the day.

Trading recommendations:

Today, traders may consider short positions with a target of 1.3671-1.3681 if the price settles below 1.3763. Long positions will become relevant with targets at 1.3833 and 1.3886 if the price bounces off 1.3763.

Explanations for the Illustrations:

• Support and resistance price levels are thick red lines around which the movement may end. They are not sources of trading signals.
• The Kijun-sen and Senkou Span B lines are Ichimoku indicator lines shifted to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extreme levels are thin red lines from which the price previously bounced. They are sources of trading signals.
• Yellow lines represent trendlines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts shows the size of the net position for each category of traders.

The material has been provided by InstaForex Company - www.instaforex.com