FX.co ★ How to Trade the GBP/USD Currency Pair on February 5? Simple Tips and Trade Analysis for Beginners

Wednesday's Trade Analysis:

1H Chart of the GBP/USD Pair

The GBP/USD pair declined notably on Wednesday, driven solely by the ISM Services Activity Index in the US. This index did not show a super-high value as the manufacturing index did on Monday, but there were no other positive news reports from the US. Moreover, there were no news reports from the UK at all. The ADP report, which is typically not considered the most important or accurate, has essentially become the only labor market report in the US this week. The JOLTS report on job openings has not been released, and the Non-Farm Payrolls and unemployment reports will not be published on Friday due to another "shutdown." The shutdown could end at any moment, as Democrats and Republicans have reached an agreement on government funding, but the Bureau of Labor Statistics still took a few days off, so the reports will be released next week. In the meantime, the ADP report showed a gain of only... 22,000 jobs in the private sector. It's worth saying that this is an absolutely disappointing figure.

5M Chart of the GBP/USD Pair

On the 5-minute timeframe, no trading signals were formed throughout the day on Wednesday. Only by the end of the day did the price reach the 1.3643-1.3652 area, and it was breached overnight. Thus, beginner traders can open short positions, but let's remember that today is the Bank of England meeting. The market's reaction to this event could be strong and unpredictable.

How to Trade on Thursday:

On the hourly timeframe, the GBP/USD pair continues to correct, but it seems that this correction will conclude soon. No global factors are driving medium-term dollar growth, so we expect the global upward trend from 2025 to continue, potentially pushing the pair to 1.4000 in the near future. Donald Trump's policies continue to hinder the strengthening of the US currency, and the events currently unfolding in the US may exert additional pressure on the dollar.

On Thursday, beginner traders may consider short positions, as the pair has consolidated below the 1.3643-1.3652 area, targeting 1.3574-1.3590. A consolidation above the 1.3643-1.3652 area will allow for long positions with a target of 1.3741-1.3751.

On the 5-minute timeframe, levels to consider include 1.3319-1.3331, 1.3365, 1.3403-1.3407, 1.3437-1.3446, 1.3484-1.3489, 1.3529-1.3543, 1.3574-1.3590, 1.3643-1.3652, 1.3741-1.3751, 1.3814-1.3832, 1.3891-1.3912, 1.3975. On Thursday, the Bank of England is holding a meeting in the UK, which is essentially the only event of the day. Traders are uncertain about how the votes will be distributed among the Monetary Policy Committee members regarding the rate, so the reaction to the outcome may be unexpected.

Main Rules of the Trading System:

1. The strength of the signal is determined by the time it took to form the signal (rebound or breaking through the level). The shorter the time, the stronger the signal.
2. If two or more trades were opened around a particular level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat market, any pair can generate numerous false signals or no signals at all. In any case, it is best to stop trading at the first signs of a flat.
4. Trades are opened during the time period between the start of the European session and until the middle of the American session, after which all trades should be manually closed.
5. On the hourly timeframe, signals from the MACD indicator should ideally be traded only when there is good volatility and a trend confirmed by a trend line or channel.
6. If two levels are too close to each other (ranging from 5 to 20 pips), they should be considered as a support or resistance area.
7. After moving 20 pips in the correct direction, it is advisable to set the Stop Loss to break-even.

What's on the Charts:

• Support and resistance levels are targets for opening buy or sell trades. Take Profit levels can be placed around them.
• Red lines indicate channels or trend lines that reflect the current trend and indicate the preferred direction for trading now.
• The MACD indicator (14,22,3) – the histogram and signal line – serves as a supplementary indicator that can also be used as a source of signals.
• Important speeches and reports (always found in the news calendar) can significantly influence the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or it is advised to exit the market to avoid a sharp price reversal against the preceding movement.
• Beginners trading in the Forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing sound money management are the keys to long-term trading success.