Trade review and tips for trading the British pound

The price test at 1.3477 occurred when the MACD indicator had moved well below the zero mark, limiting the pair's downside potential. The second test of 1.3477 coincided with the MACD being in an oversold area, prompting the implementation of Buy Scenario No. 2 for the pound, resulting in a 20-pip rise in the pair.

The disappointing ADP employment report set the tone for trading and weakened the dollar. The US private sector added only 38,000 jobs in August, the lowest since January, and the hiring structure was even more troubling: manufacturing was the weakest sector, while education and healthcare accounted for almost the entire gain. Labor-market weakness reduced expectations of a hawkish Federal Reserve and undermined demand for the US currency. The British pound took advantage of the dollar's weakening and strengthened against it, though a large upward correction did not materialize.

Today, the British currency enters the first half of the day with a focus on the final estimates of the services and composite PMIs. Business activity indices are leading indicators because they are the first to capture shifts in business sentiment, and through expectations for Bank of England policy they also affect the pound's exchange rate. Since these are revised figures, the market will watch primarily for deviations from preliminary values. The outlook for the pair depends on the direction of the revision. Confirmation or improvement of strong preliminary services figures can support the pound against the dollar, especially given the BoE's persistently cautious hawkish stance. A deterioration in the estimates will quickly reapply pressure to GBP/USD.

As for the intraday strategy, I will rely mainly on executing Scenarios No. 1 and No. 2.

Buy scenarios

Scenario No. 1: I plan to buy the pound today if the entry point around 1.3497 (the green line on the chart) is reached, with a target to rise to 1.3523 (the thicker green line on the chart). Around 1.3523, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip move in the opposite direction from that level). Expect pound strength today only after strong data. Important! Before buying, make sure the MACD indicator is above the zero mark and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of 1.3485, with the MACD indicator in an oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise toward the opposite levels of 1.3497 and 1.3523.

Sell scenarios

Scenario No. 1: I plan to sell the pound today after the level 1.3485 (the red line on the chart) is breached, which will lead to a quick decline in the pair. The key target for sellers will be 1.3459, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip move in the opposite direction from that level). Bad news will bring pressure back on the pound. Important! Before selling, make sure the MACD indicator is below the zero mark and is just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound today if there are two consecutive tests of 1.3497 while the MACD indicator is in an overbought area. This will limit the pair's upside potential and lead to a downward reversal. One can expect a decline toward the opposite levels of 1.3485 and 1.3459.

What to Look for on the Chart:

• Thin Green Line – Entry price at which you can buy the trading instrument;
• Thick Green Line – Estimated price where you can set Take Profit or manually secure profits, as further growth above this level is unlikely;
• Thin Red Line – Entry price at which you can sell the trading instrument;
• Thick Red Line – Estimated price where you can set Take Profit or manually secure profits, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it's important to consider overbought and oversold zones.

Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to stay out of the market ahead of significant fundamental reports to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not employ money management practices and trade large volumes.

Also, remember that successful trading requires a clear trading plan, similar to the one provided above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.