Trade review and tips for trading the British pound

A price test at 1.3305 occurred as the MACD indicator began moving up from the zero line, confirming a valid entry point to buy the pound. As a result, the pair rose toward the 1.3337 target area.

Sterling is in a favorable position today. There are no UK releases, and the external backdrop is supportive. In the second half of the day, the US calendar is also light; attention will shift to US industrial production, manufacturing output and capacity utilization. Those prints are unlikely to give the dollar a fresh impulse, so risk-asset appetite should continue and support demand for the pound. The UK picture also remains resilient heading into the end of the week: August GDP rose 0.1% month-on-month versus -0.1% expected and +0.7% over three months versus +0.5% expected, while industrial production jumped 0.8%. These figures bolster Bank of England hawks Huw Pill, Megan Greene and Catherine Mann. The dollar has little to help it—Kevin Warsh gave no clear signal for a hike or a hint of a pause.

For intraday strategy, I will mainly rely on Scenarios 1 and 2.

Buy signal

Scenario 1: Buy the pound today near 1.3353 (green line on the chart), targeting 1.3399 (thicker green line). I will exit long positions at 1.3399 and open short positions there, aiming for a 30–35 pip retracement. Expect pound gains today after weak US prints. Important: before buying, ensure MACD is above zero and only beginning to rise.

Scenario 2: Also consider buying if price tests 1.3326 twice while MACD is in the oversold area. That would limit downside potential and trigger a reversal higher. Expect moves to 1.3353 and 1.3399.

Sell signal

Scenario 1: Plan to sell the pound after a break below 1.3326 (red line). That should lead to a quick decline. Sellers' key target is 1.3293, where I will exit shorts and immediately open longs (aiming for a 20–25 pip reversal). Strong renewed pressure on the pound would require a hawkish turn from policymakers. Important: before selling, ensure MACD is below zero and only beginning to fall.

Scenario 2: Also consider selling if price tests 1.3353 twice while MACD is in the overbought area. That would limit upside potential and trigger a downward reversal. Expect declines toward 1.3326 and 1.3293.

What's on the chart:

• Thin green line — entry price at which you can buy the instrument.
• Thick green line — suggested Take-Profit area or a level where you may choose to lock in gains, because further upside above that level is unlikely.
• Thin red line — entry price at which you can sell the instrument.
• Thick red line — suggested Take-Profit area or a level where you may choose to lock in gains, because further downside below that level is unlikely.
• MACD indicator — when entering the market, watch for overbought and oversold zones.

Important. Beginner Forex traders must be very cautious when deciding to enter the market. It is best to stay out of the market before major fundamental releases to avoid getting caught in sharp price moves. If you trade during news releases, always place stop orders to limit losses. Without stop orders,, you can lose your entire deposit very quickly, especially if you don't use money management and trade large volumes.

And remember: successful trading requires a clear trading plan like the one shown above. Spontaneous trading decisions based solely on current market noise are a losing strategy for intraday traders.