Trade Review for Thursday:

1H Chart of the GBP/USD Pair

The GBP/USD pair on Thursday also continued its downward movement for unexplained reasons. Of course, one can again say that rising "hawkish" market sentiment about Federal Reserve policy is driving the US dollar higher. However, we would like to remind readers that the Bank of England may also tighten monetary policy twice in the coming months, while the market has been pricing Fed tightening for three weeks. In our view, this is absolutely illogical, so we do not see the recent leg of dollar strength as justified. We also see little point in paying attention to macroeconomic or fundamental events right now, since they have no discernible effect on the price. In addition, US Treasury yields continue to rise, which essentially signals a drop in demand for these securities. That means investment in the US economy is falling, especially from external sources. Thus, there still aren't strong reasons for further dollar strengthening.

5M Chart of the GBP/USD Pair

On the 5-minute TF on Thursday, no trading signals formed, although during the European session price approached 1.3259. However, the move had too large an error, so we do not consider that touch a sell signal. For most of the day, the pair moved sideways with low volatility.

How to Trade on Friday:

On the hourly TF, GBP/USD continues its downward trend, which has become a full-fledged trend. The fundamental backdrop for the dollar and the pound changed sharply last week when the Fed signaled readiness to continue tightening monetary policy. As a result, the dollar's prospects in the second half of 2026 have improved, but no other factors support the US currency. The dollar has been rising for three weeks on a single factor.

On Friday, novice traders can remain in short positions with a target of 1.3175–1.3180 after a signal of price consolidation below the 1.3259–1.3267 area. Open long positions targeting 1.3259–1.3267 if price rebounds from the 1.3175–1.3180 area.

On the 5-minute TF you can trade the levels 1.3096–1.3107, 1.3175–1.3180, 1.3259–1.3267, 1.3319–1.3331, 1.3380–1.3386, 1.3456–1.3476, 1.3587–1.3598, 1.3631–1.3641. No important events are scheduled in the UK on Friday, while the US will release a fairly important durable goods orders report. We do not expect this report to provoke a strong market reaction, and the market may not pay much attention to it.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (rebound or breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a certain level based on false signals, all subsequent signals from that level should be ignored.
3. In a range (flat), any pair can generate many false signals or may not produce any at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be acted upon only when volatility is high, and a trend line or trend channel confirms the trend.
5. If two levels are too close together (within 5-20 pips), treat them as a support or resistance area.
6. After moving 15 pips in the right direction, a stop-loss should be set to break even.

What to Look for on the Charts:

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.