Analysis of Trades and Trading Tips for the British Pound

The 1.3734 price test occurred when the MACD indicator had already moved significantly below the zero mark, which limited the pair's downside potential. For this reason, I did not sell the pound. The second test of this level happened while the MACD was in the oversold zone, which allowed buy scenario #2 to unfold. However, the trade resulted in a loss, as the pound continued to decline.

Yesterday's statements from the Federal Reserve Chair that the committee is not planning to cut interest rates due to fears of a sharper rise in U.S. inflation helped the dollar gain against the British pound. Strong ISM data also boosted dollar purchases and pound sales. The dollar's strengthening, supported by hawkish rhetoric from the Fed and solid macroeconomic indicators, put significant pressure on the pound.

Despite this, the GBP/USD pair still looks bullish in the near term. If the Fed yields to pressure from Trump and if Friday's labor market data disappoints, the pound is likely to continue its upward trend. Yesterday's comments from Bank of England Governor Andrew Bailey that high interest rates have less impact on inflation also give the pound room to grow. Investors interpreted this rhetoric as a signal that current rates may be kept unchanged at the upcoming policy meetings.

There are no UK data scheduled for release in the first half of today, so attention will shift to the speech by Bank of England Financial Policy Committee member Martin Taylor. His remarks are expected to shed light on the BoE's current assessment of the UK economy and inflation outlook. The market will closely monitor any hints about the future direction of monetary policy. The importance of Taylor's speech lies in the absence of alternative drivers for the pound during the first half of the day. With no macroeconomic data, the currency becomes more vulnerable to verbal interventions. His comments could significantly impact the short-term dynamics of GBP/USD and other pound-related currency pairs.

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 near 1.3753 (indicated by the green line on the chart) to rise to 1.3791 (represented by the thicker green line on the chart). Around 1.3791, I will exit long positions and open short positions on a reversal, targeting a 30–35-pip pullback from that level. The pound's rise today may continue as part of an upward trend.

Important: Before buying, ensure the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario #2: I also plan to buy the pound today in case of two consecutive tests of the 1.3733 level, while the MACD is in the oversold zone. This will limit the downside potential and lead to a market reversal upward. Growth toward the opposite levels 1.3753 and 1.3791 can be expected.

Sell Scenario

Scenario #1: I plan to sell the pound today after breaking below the 1.3733 level (red line on the chart), which would lead to a quick decline in the pair. The key target for sellers will be 1.3696, where I plan to exit short positions and open buy positions on a rebound (aiming for a 20–25-pip reversal from the level). Selling the pound is an option after a failed attempt to rise above the daily high.

Important: Before selling, ensure the MACD indicator is below the zero line and is just starting to decline from it.

Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the 1.3753 level while the MACD is in the overbought zone. This will limit the upside potential and trigger a downward reversal. A decline toward the opposite levels 1.3733 and 1.3696 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.