Analysis of Trades and Trading Tips for the British Pound

The price test at 1.3488 coincided with the moment when the MACD indicator had already moved significantly below the zero mark, which limited the pair's downside potential – especially in the context of the recent bullish market. For this reason, I did not sell the pound.

Yesterday, the pound quickly lost the advantage it had gained immediately after Federal Reserve Chair Jerome Powell's speech at the end of last week, when he hinted at a rate cut in September this year. The euphoria sparked by the prospect of monetary policy easing in the U.S. proved short-lived. Investors likely realized that a mere hint was not enough to support the pound, which is in urgent need of stronger internal drivers. A key factor influencing the pound's dynamics may have been the latest inflation data in the U.K. Despite the Bank of England's efforts, inflation remains high, creating a dilemma for the central bank. On one hand, it must continue fighting rising prices, while on the other, excessive monetary tightening could lead to recession.

This morning, Catherine L. Mann, a member of the Bank of England's Monetary Policy Committee, is scheduled to give a speech. Her remarks could potentially have a short-term positive impact on GBP/USD. The focus will be on her statements regarding the overall state of the U.K. economy. Recent economic data signaled slowing growth and persistent inflation, which does not boost investor confidence. Mann's comments on these issues may be met with some skepticism. The market will also assess how her remarks align with the BoE's overall stance, which seeks to balance controlling inflation with preventing economic downturn. Any signals of a possible policy shift could trigger exchange rate fluctuations.

For intraday strategy, I will focus primarily on Scenarios #1 and #2.

Buy Scenario

Scenario #1: I plan to buy the pound today at the entry point around 1.3472 (green line on the chart) with a target at 1.3504 (thicker green line on the chart). Around 1.3504, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 point pullback from the level). Today, growth in the pound can be considered only within a sideways channel.

Important! Before buying, make sure the MACD indicator is above the zero line and only starting to rise from it.

Scenario #2: I also plan to buy the pound today if there are two consecutive tests of 1.3450 at the moment when the MACD indicator is in the oversold zone. This will limit the pair's downside potential and lead to an upward reversal. Growth toward 1.3472 and 1.3504 can be expected.

Sell Scenario

Scenario #1: I plan to sell the pound today after the price updates 1.3450 (red line on the chart), which will lead to a quick decline in the pair. The key target for sellers will be 1.3422, where I intend to exit sales and immediately open buys in the opposite direction (expecting a 20–25 point rebound from the level). Sellers are expected to act more actively today.

Important! Before selling, make sure the MACD indicator is below the zero line and only starting to decline from it.

Scenario #2: I also plan to sell the pound today if there are two consecutive tests of 1.3472 at the moment when the MACD indicator is in the overbought zone. This will limit the pair's upside potential and lead to a reversal downward. A decline toward 1.3450 and 1.3422 can be expected.

What's on the Chart:

• The thin green line represents the entry price where the trading instrument can be bought.
• The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
• The thin red line represents the entry price where the trading instrument can be sold.
• The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
• The MACD indicator should be used to assess overbought and oversold zones when entering the market.

Important Notes:

• Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
• Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.