Trade analysis and advice on trading the British pound
The price test of 1.3441 occurred at a moment when the MACD indicator had already moved far below the zero line, which limited the pair's downward potential. For this reason, I did not sell the pound and stayed out of trades.
Data from the Confederation of British Industry did not provide strong support for the pound. The sluggish market response reflects several key trends shaping the currency's future. First, investors likely had already priced in expectations tied to the CBI data. Second, global factors such as central bank policy and domestic political issues may have a stronger influence on the pound than local data.
Today, the dollar may strengthen against the pound if data on initial jobless claims and Q2 GDP revision come in better than economists' forecasts. This scenario rests on a simple but effective mechanism: strong U.S. macroeconomic data enhances the dollar's appeal. A lower-than-expected jobless claims figure would confirm the resilience of the U.S. labor market, one of the Fed's key considerations in setting interest rates. Similarly, an upward revision to Q2 GDP would reinforce confidence that the U.S. economy will avoid recession, also supporting the dollar. A stronger economy justifies a more hawkish Fed stance and attracts capital inflows into the U.S.
As for intraday strategy, I will rely more on implementing scenarios #1 and #2.
Buy signal
Scenario #1: I plan to buy the pound today at the entry point around 1.3464 (green line on the chart), targeting growth toward 1.3494 (thicker green line on the chart). Near 1.3494, I will exit long positions and open shorts in the opposite direction (expecting a 30–35 point pullback). Strong growth in the pound can be expected if U.S. data is weak. Important! Before buying, make sure the MACD indicator is above the zero line and only beginning to rise from it.
Scenario #2: I also plan to buy the pound today if there are two consecutive tests of 1.3441, at a moment when the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger a reversal upward. Growth can then be expected toward the opposite levels of 1.3464 and 1.3494.
Sell signal
Scenario #1: I plan to sell the pound today after a breakout below 1.3441 (red line on the chart), which would lead to a quick decline in the pair. The key bearish target will be 1.3407, where I will exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 point rebound). The pound could fall sharply in the second half of the day if U.S. data is strong. Important! Before selling, make sure the MACD indicator is below the zero line and only beginning to decline from it.
Scenario #2: I also plan to sell the pound today in case of two consecutive tests of 1.3464, at a moment when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and trigger a reversal downward. A decline can then be expected toward the opposite levels of 1.3441 and 1.3407.
Chart guide
- Thin green line – entry price where the instrument can be bought.
- Thick green line – approximate price to set Take Profit or lock in profit manually, as further growth above this level is unlikely.
- Thin red line – entry price where the instrument can be sold.
- Thick red line – approximate price to set Take Profit or lock in profit manually, as further decline below this level is unlikely.
- MACD indicator – when entering the market, it is important to follow overbought and oversold zones.
Important. Beginner Forex traders must be very cautious when making entry decisions. Ahead of important fundamental reports, it is best to stay out of the market to avoid sharp volatility. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you ignore money management and trade with large volumes.
And remember: successful trading requires a clear trading plan, like the one outlined above. Spontaneous decisions based on current market moves are inherently a losing strategy for intraday traders.
