Trade analysis and tips for trading the British pound

The test of the 1.3257 level occurred when the MACD indicator had just begun moving downward from the zero line, confirming a correct entry point for selling the pound. As a result, the pair declined by only 15 points.

Amid the lack of significant UK statistical data and with the Bank of England's interest rate decision approaching, the British pound is showing some signs of recovery. This cautious optimism is linked to market participants' expectations, as they closely monitor any signals regarding future monetary policy and how the regulator will respond to the risks of renewed inflationary pressure due to the war in the Middle East.

Traders will also focus on US data on initial jobless claims and new home sales. These macroeconomic indicators typically have a significant impact on financial markets. Initial jobless claims serve as a timely indicator of labor market conditions. An increase in this figure signals rising unemployment and a potential slowdown in consumer spending, which could negatively affect the US dollar. Meanwhile, new home sales reflect the state of the housing sector, which is closely tied to consumer confidence and investment activity. Strong figures stimulate the construction industry and related sectors, supporting demand for the dollar.

As for the intraday strategy, I will mainly rely on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: I plan to buy the pound today when the price reaches the entry point around 1.3295 (green line on the chart), with a target of 1.3347 (thicker green line on the chart). Around 1.3347, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 point move). Pound growth today can be expected after weak US 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 today if there are two consecutive tests of the 1.3265 level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to an upward reversal. Growth toward the opposite levels of 1.3295 and 1.3342 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after a break of the 1.3265 level (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be 1.3221, where I will exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 point move). Pressure on the pound may return at any moment.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 today if there are two consecutive tests of the 1.3295 level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward reversal. A decline toward the opposite levels of 1.3265 and 1.3221 can be expected.

What's on the chart:

• Thin green line – entry price for buying
• Thick green line – suggested Take Profit level or where profits can be locked in, as further growth above this level is unlikely
• Thin red line – entry price for selling
• Thick red line – suggested Take Profit level or where profits can be locked in, as further decline below this level is unlikely
• MACD indicator – when entering the market, pay attention to overbought and oversold zones

Important

Beginner Forex traders should make entry decisions very carefully. Before major fundamental reports are released, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always use stop-loss orders to minimize losses. Without stop-loss orders, you can quickly lose your entire deposit, especially if you do not use proper money management and trade large volumes.

Remember, successful trading requires a clear trading plan like the one outlined above. Spontaneous trading decisions based on current market conditions are generally a losing strategy for intraday traders.