Trade Review and Trading Tips for the British Pound
The test of the 1.3601 price level occurred at the moment when the MACD indicator had just begun moving upward from the zero line, confirming a valid entry point for buying the pound. As a result, the pair rose toward the target level of 1.3632.
This morning, the UK Construction PMI (Purchasing Managers' Index) was released. The indicator collapsed to 39.7 points, significantly below analysts' expectations of around 48–49 points. A reading of 39.7 signals a deep recession in the construction sector. What is truly surprising is the complete lack of reaction from the British pound to such disappointing figures. Under normal conditions, a PMI drop to this level would have triggered an immediate sell-off in the pound of at least 50–70 points or more. However, today GBP/USD barely reacted to the news, continuing to trade within a narrow range formed earlier in the morning.
The explanation for this anomaly lies in geopolitics. At the moment, traders' attention is almost entirely focused on developments surrounding negotiations between the United States and Iran. Every new statement from Donald Trump triggers a stronger market reaction than any economic data, even such significant indicators as PMI.
In the second half of the day, market focus will shift to initial jobless claims data. This weekly indicator, despite its volatility, remains one of the most timely gauges of the U.S. labor market's health. Any deviation from consensus forecasts is likely to trigger a noticeable reaction in the dollar. At the same time, attention will be on a speech by Federal Open Market Committee member Beth M. Hammack.
As for the intraday strategy, I will mainly rely on Scenarios No. 1 and No. 2.
Buy Signal
Scenario No. 1:
Today, I plan to buy the pound at the 1.3634 level (green line on the chart), targeting a rise toward 1.3665 (thick green line on the chart). At 1.3665, I plan to exit long positions and open short positions in the opposite direction, targeting a 30–35 point move downward from that level. Further pound growth today is only possible after weak U.S. data.
Important: Before buying, make sure the MACD indicator is above the zero line and just beginning to rise from it.
Scenario No. 2:
I also plan to buy the pound if there are two consecutive tests of the 1.3615 level while the MACD indicator is in oversold territory. This would limit downward potential and trigger a reversal upward. In this case, a move toward 1.3634 and 1.3665 can be expected.
Sell Signal
Scenario No. 1:
I plan to sell the pound after a breakdown below 1.3615 (red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers is 1.3585, where I will exit short positions and immediately open buy positions in the opposite direction, targeting a 20–25 point rebound.
Downward pressure on the pound may return today if strong U.S. data is released.
Important: Before selling, make sure the MACD indicator is below the zero line and just beginning to decline from it.
Scenario No. 2:
I also plan to sell the pound if there are two consecutive tests of the 1.3634 level while the MACD indicator is in overbought territory. This would limit upward potential and trigger a reversal downward. A decline toward 1.3615 and 1.3585 can then be expected.
What is on the chart:
- Thin green line – entry price for buying the trading instrument;
- Thick green line – estimated take-profit level or area for manual profit-taking, as further growth above this level is unlikely;
- Thin red line – entry price for selling the trading instrument;
- Thick red line – estimated take-profit level or area for manual profit-taking, as further decline below this level is unlikely;
- MACD indicator – when entering the market, it is important to use overbought and oversold zones.
Important
Beginner Forex traders should make entry decisions very carefully. Before major fundamental releases, it is best to stay out of the market to avoid sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize losses. Without stop-loss orders, you may quickly lose your entire deposit, especially if you do not use proper money management and trade large volumes.
And remember: successful trading requires a clear trading plan, such as the one described above. Spontaneous trading decisions based solely on current market conditions are a losing strategy for intraday traders.
