Trade Review and Trading Tips for the British Pound
The 1.3615 price test occurred when the MACD indicator was just beginning to move upward from the zero line, confirming that it was an appropriate entry point for buying the pound. As a result, the pair rose toward 1.3635, the target level.
The pound rose in response to news that the UK manufacturing sector continued to show encouraging signs. According to today's CBI report, the total order book balance was only 25% below normal, compared with 45% below normal in July. The indicator is based on a survey of manufacturing companies and reflects the state of industrial demand, so the improvement was interpreted by the market as a sign of a recovery in the sector, which supported the British currency. Exports were particularly notable, as overseas orders returned to exactly normal levels for the first time since June 2022. The improvement was driven by the chemical industry, electrical goods, and other manufacturing sectors. For the Bank of England, the report was a mixed signal, as demand is recovering, while rising price expectations support the position of the three committee members who voted for a rate hike as recently as July.
In the second half of the day, the U.S. agenda will determine the direction of the pound, as the British currency has no significant domestic catalysts today. The focus will be on weekly initial jobless claims, the Philadelphia Fed Manufacturing Index, and the Leading Economic Index. Jobless claims provide a timely assessment of labor-market conditions, the Philadelphia Fed Manufacturing Index reflects business activity in the manufacturing sector, and leading indicators help assess the future direction of the economy. Through these channels, the data affect the strength of the dollar. Under these circumstances, the pound becomes dependent on external factors. Only very strong data will support the dollar, which means that weak figures would allow GBP/USD to hold its current levels. Strong data, however, would restore demand for the U.S. currency and could put pressure on the pound.
As for the intraday strategy, I will focus more on the implementation of Scenarios #1 and #2.
Buy Signal
Scenario #1: Today, I plan to buy the pound when the entry point is reached around 1.3644 (the green line on the chart), with a target of 1.3665 (the thicker green line on the chart). Around 1.3665, I will close the long position and open a short position in the opposite direction, targeting a move of 30–35 points in the opposite direction from the level. The pound's rise can be expected to continue the current trend today only after weak U.S. economic data. Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.
Scenario #2: Today, I also plan to buy the pound if the price tests 1.3630 twice consecutively while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to a reversal higher. A rise toward the opposite levels of 1.3644 and 1.3665 can be expected.
Sell Signal
Scenario #1: Today, I plan to sell the pound after the 1.3630 level is broken (the red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 1.3607, where I will close the short position and immediately open a long position in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Strong downward pressure on the pound will return following strong U.S. economic data. Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.
Scenario #2: Today, I also plan to sell the pound if the price tests 1.3644 twice consecutively while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a reversal lower. A decline toward the opposite levels of 1.3630 and 1.3607 can be expected.
What the Chart Shows
- Thin green line — the entry price at which the trading instrument can be bought.
- Thick green line — the expected price level at which Take Profit can be set or profits can be taken manually, as further growth above this level is unlikely.
- Thin red line — the entry price at which the trading instrument can be sold.
- Thick red line — the expected price level at which Take Profit can be set or profits can be taken manually, as further decline below this level is unlikely.
- MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.
Important. Beginner Forex traders should be extremely cautious when making decisions about entering the market. Before the release of important fundamental reports, it is best to stay out of the market to avoid being caught in sharp price fluctuations. If you decide to trade during the release of economic data, always place stop orders to minimize losses. Without stop orders, you can lose your entire account balance very quickly, especially if you do not use proper money management and trade large volumes.
And remember that successful trading requires a clear trading plan, such as the one presented above. Making trading decisions spontaneously based on the current market situation is fundamentally a losing strategy for an intraday trader.
