Trade analysis and tips for trading the British pound

The test of 1.3628 occurred at the moment when the MACD indicator had already moved well above the zero line, which limited the pound's upward potential.

Weak UK labor market data prevented pound buyers from achieving strong growth in the pair. However, there was no sharp decline either. A possible explanation for this dynamic is that the market had already priced in weak employment figures. In addition, speculative factors cannot be ruled out. Large players with significant resources may have taken advantage of the pound's temporary weakness to build long positions, betting on further strengthening after tomorrow's Fed meeting.

In the second half of the day, U.S. data on retail sales for August, industrial production, and manufacturing output will be released. Weak results will likely lead to another wave of pound growth, supported by the diverging monetary policy trajectories of the Federal Reserve and the Bank of England.

If U.S. figures disappoint, the market will receive additional confirmation of slowing U.S. economic growth, increasing the likelihood of further Fed easing even after tomorrow's meeting. Dollar pressure will intensify as investors revise their expectations for future interest rates.

As for intraday strategy, I will rely more on scenarios #1 and #2.

Buy signal

Scenario #1: I plan to buy the pound today at the entry point around 1.3646 (green line on the chart), targeting 1.3671 (thicker green line on the chart). Around 1.3671, I will exit buys and open sales in the opposite direction, aiming for a 30–35-point pullback. A strong rise in the pound today can only be expected after weak U.S. data. Important! Before buying, make sure the MACD indicator is above the zero line and just starting to rise from it.

Scenario #2: I also plan to buy the pound today if there are two consecutive tests of 1.3627, at the moment when the MACD indicator is in the oversold area. This would limit the pair's downward potential and trigger a reversal upward. Growth toward 1.3646 and 1.3671 can be expected.

Sell signal

Scenario #1: I plan to sell the pound today after a break below 1.3627 (red line on the chart), which will lead to a quick decline in the pair. The key target for sellers will be 1.3599, where I plan to exit sales and immediately open buys in the opposite direction, aiming for a 20–25-point pullback. Even with strong U.S. data, the pound is unlikely to collapse. Important! Before selling, make sure the MACD indicator is below the zero line and just starting to decline from it.

Scenario #2: I also plan to sell the pound today if there are two consecutive tests of 1.3646, at the moment when the MACD indicator is in the overbought area. This would limit the pair's upward potential and trigger a reversal downward. A decline toward 1.3627 and 1.3599 can be expected.

What's on the chart:

• Thin green line – entry price for buying the instrument;
• Thick green line – expected price for placing Take Profit or manually fixing profit, as further growth above this level is unlikely;
• Thin red line – entry price for selling the instrument;
• Thick red line – expected price for placing Take Profit or manually fixing profit, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to use overbought and oversold areas as guidance.

Important. Beginner traders in the Forex market should be very cautious when making entry decisions. Before major fundamental reports are released, it is best to stay out of the market to avoid sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you don't use money management and trade with large volumes.

And remember, successful trading requires a clear trading plan, like the one presented above. Spontaneous trading decisions based on the current market situation are, by definition, a losing strategy for intraday traders.