GBP/USD: Bears may be walking into a trap

British Pound / U.S. Dollar Long 2 days ago 2 Grab this chart Grab this chart 3 3 38 From a technical perspective, the broader structure remains constructive. Price recently pushed into the 1.3600–1.3660 weekly supply/liquidity area, where sellers reacted aggressively, bringing the pair back toward the previous breakout zone. For me, this pullback does not automatically represent a bearish reversal. Instead, I see the 1.3505–1.3530 area as the key decision zone for the next directional move. The latest COT report shows GBP non-commercial traders holding 93,612 long contracts against 138,136 shorts, leaving speculative positioning at approximately −44.5K net contracts. On an absolute basis, this remains bearish. However, I am much more interested in the change in positioning than in the absolute number alone. During the latest reporting week, GBP longs increased by +16,269 contracts, while shorts increased by only +6,220. This means net positioning improved by roughly 10K contracts in a single week. Therefore, I would not describe GBP positioning as bullish yet, but rather as bearish with improving momentum. The market is still heavily positioned against sterling, but institutional positioning is progressively becoming less negative. The USD side provides another useful piece of information. USD Index non-commercial positioning remains strongly net long, with approximately 29K longs versus 10K shorts. However, during the latest week both long and short exposure declined slightly, meaning that the bullish USD positioning remains intact but is currently not expanding aggressively. Retail positioning adds another layer of confluence. According to the sentiment data I am monitoring, approximately 61% of GBP/USD traders are short, compared with only 39% long. I treat retail positioning as a contrarian indicator rather than a directional signal by itself. Seasonality, however, remains the main factor working against my bullish scenario. Historical August performance is negative across most observation periods, including the 20-year, 15-year, 10-year and 5-year averages. Nevertheless, with August now ending, I assign progressively less weight to this factor as the market transitions into September. As long as GBP/USD maintains acceptance above 1.3505–1.3530, I will continue looking for long opportunities. Above 1.3505 → I look for longs toward weekly liquidity. Below 1.3505 → the thesis changes.