FX.co ★ Trading Recommendations and Trade Analysis for GBP/USD on October 2. The Pound Is No Friend to the Euro

GBP/USD 5-Minute Analysis

The GBP/USD pair also moved in various directions on Wednesday, influenced by the macroeconomic backdrop. During the early part of the day, the British pound continued its technical recovery. However, in the second half of the day, volatility surged. First, the U.S. ADP employment report was released with a negative figure. Then came the U.S. ISM Manufacturing PMI, which showed a "conditionally-positive" result. As a result, the dollar initially weakened, then strengthened — and now, a new downtrend is visible on the hourly timeframe.

The U.S. labor market continues to show signs of strain, and this Friday's usual Nonfarm Payrolls may not be published due to the government shutdown. The shutdown — effectively a halt in all government operations due to the lack of an approved budget — has largely shut down federal services. It is likely that the U.S. Bureau of Labor Statistics will not release the NFP report this week.

While ADP and NFP reports rarely align exactly, the overall trend is quite apparent. On top of already troubling labor market data, the shutdown adds further pressure on expectations. As such, the chances of any meaningful rebound in the dollar this week are slim.

Despite the multi-directional movement, the 5-minute GBP/USD chart showed a clearer structure throughout the day compared with the EUR/USD pair. However, not a single viable trading signal was generated. So, although the price action was decent, traders had no proper entry points.

COT Report

COT reports on the British pound indicate that, in recent years, the sentiment of commercial traders has been constantly shifting. The red and blue lines, representing net positions of commercial and non-commercial traders, frequently intersect and mostly hover near the zero mark. Currently, they are nearly at the same level, indicating roughly equal numbers of long and short positions.

The dollar continues to decline due to Donald Trump's policies, so in principle, market makers' demand for sterling is not especially important right now. The trade war is likely to persist in one form or another for an extended period. The Fed will cut rates in the coming year anyway. Demand for the dollar is expected to continue declining. According to the latest report on the British pound, the "Non-commercial" group opened 3,700 long contracts and closed 900 short contracts. As a result, the net position of non-commercial traders increased by 4,600 contracts over the week.

In 2025, the pound appreciated significantly, and the reason behind this change is clear: the policies of Trump. Once this factor is neutralized, the dollar may shift into growth, but no one knows when that will happen. It doesn't matter how quickly the net position of the pound rises or falls. For the dollar, it is falling anyway, usually at a faster pace.

GBP/USD 1-Hour Analysis

In the 1-hour timeframe, GBP/USD continues to develop a new upward trend. The trendline was broken previously, which gives traders justification to expect further gains. The dollar still lacks strong fundamental backing, so we anticipate the continuation of the 2025 upward trend. On Tuesday, the pair bounced from the Senkou Span B line — around the same time that the ISM manufacturing index came out somewhat better than expected. However, this moment of dollar strength has not altered the overall picture.

Key levels for October 2 include: 1.3125, 1.3212, 1.3369–1.3377, 1.3420, 1.3533–1.3548, 1.3584, 1.3681, 1.3763, 1.3833, 1.3886. Key Ichimoku indicator lines: Senkou Span B (1.3524) and Kijun-sen (1.3425). The Ichimoku levels may fluctuate throughout the day, so real-time updates should be closely monitored. Also, once the price moves 20 pips in your favor, a Stop Loss should be moved to breakeven to minimize risk.

No major economic releases are expected from the UK on Thursday. The U.S. will publish weekly jobless claims, a minor report. As such, volatility may remain low, and trend-based intraday movement could be limited.

Trading Recommendations

On Thursday, traders can expect a potential continuation of the upward movement. However, there are no nearby price levels or Ichimoku lines likely to generate fresh signals. The last buy signal occurred on Tuesday after a bounce from 1.3420. With no immediate resistance levels nearby, the pound has no technical barriers to continuing its rise.

Illustration Explanations:

• Support and resistance price levels – thick red lines where movement may end. They are not trading signal sources.
• Kijun-sen and Senkou Span B lines—These are strong Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour one.
• Extremum levels – thin red lines where the price has previously rebounded. These act as trading signal sources.
• Yellow lines – trend lines, trend channels, and other technical patterns.
• Indicator 1 on the COT charts – the size of the net position for each category of traders.