Trade review and tips for trading the British pound

The price test at 1.3322 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 target area near 1.3356.

Yesterday's GBP/USD gain looks paradoxical given strong U.S. GDP. Growth was 3.4% year-on- year versus a 3.2% forecast. But beneath the surface, the picture is softer: the U.S. consumer is holding up less well than the broader economy, and real spending in September was almost unchanged. Inflation also allowed the Federal Reserve to take a more cautious tone. Core PCE on an annual basis printed 3.6% (in line with forecasts; the Fed's target is 2%), and month-on-month core PCE rose 0.5% — the fastest monthly pace since March, matching expectations.

The U.K. calendar is almost empty today; the only release is Nationwide's October house-price index. Economists expect a -0.2% monthly change (same as the prior reading) and a slowdown in the year-on-year rate to +0.6% from +0.8%. If the figures come in stronger than expected, the pound would have fresh reason to continue rising versus the dollar, since the housing market is one of the sectors most sensitive to interest rates.

For intraday strategy, I will mainly rely on Scenarios No. 1 and No. 2.

Scenarios for Buying

Scenario No. 1: I plan to buy the pound today at an entry around 1.3400 (the green line on the chart), targeting 1.3437 (the thicker green line on the chart). Around 1.3437, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35-pip move from that level). You can count on the pound rising today only after strong data. Important! Before buying, make sure the MACD indicator is above zero and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today if it tests 1.3379 twice in a row while the MACD indicator is in the oversold area. That will limit the pair's downside potential and trigger a reversal upward. One can expect a rise to the opposite levels of 1.3400 and 1.3437.

Scenarios for Selling

Scenario No. 1: I plan to sell the pound today after 1.3379 is refreshed (red line on the chart), which will lead to a rapid decline of the pair. The sellers' key target will be 1.3356, where I intend to exit shorts and immediately open longs in the opposite direction (expecting a 20–25-pip move from that level). Bad news will return pressure on the pound. Important! Before selling, make sure the MACD indicator is below zero and is just beginning to fall from it.

Scenario No. 2: I also plan to sell the pound today in the event of two consecutive tests of 1.3400 when the MACD indicator is in the overbought area. That will limit the pair's upside potential and lead to a downward reversal. One can expect a decline to the opposite levels of 1.3379 and 1.3356.

What's on the chart:

Thin green line — entry price where you can buy the instrument.

Thick green line — approximate price where you can place Take Profit or manually lock in profits, because further upside above this level is unlikely.

Thin red line — entry price where you can sell the instrument.

Thick red line — approximate price where you can place Take Profit or manually lock in profits, because further downside below this level is unlikely.

MACD indicator. When entering the market, it's important to consider overbought and oversold zones.

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

Remember: successful trading requires a clear trading plan, like the example above. Spontaneous trade decisions based solely on the immediate market situation are, by definition, a losing strategy for an intraday trader.