Review of Trades and Trading Tips for the British Pound

The test of the 1.3424 price level occurred when the MACD indicator had already moved significantly upward from the zero line, limiting the pair's upward potential.

The pound rose significantly yesterday, fully recovering the losses accumulated after Friday's US labor market report. Today, GBP/USD is holding around 1.3448. In the evening, Federal Reserve officials Goolsbee and Barkin made hawkish statements, emphasizing the fight against inflation, but pound buyers largely ignored their comments. The increase in US wholesale inventories by 0.7%, compared with a forecast of 0.6%, also failed to restore demand for the dollar. This suggests that the pound's current appreciation is driven not by UK economic data but by weakness in the US currency. UK economic figures released last week were generally disappointing. This morning, the BRC Retail Sales Monitor came in at 1.1%, compared with a forecast of 1.2%. As a result, the pound remains dependent on external factors, with sentiment toward the US dollar serving as the main market driver.

There are no UK economic data releases scheduled for the first half of the day. The only notable event is a speech by Sarah Breeden of the Bank of England's Financial Policy Committee. A hawkish tone from Breeden could provide additional support for the pair, particularly if she confirms that the central bank does not intend to pause its tightening cycle. It is worth recalling that the interest rate was raised to 4.00% on November 5, with a unanimous 9-0-0 vote. In September, however, only three members had supported a rate increase, while Bailey also indicated at the time that a second increase was possible if energy prices returned to their previous levels. The market currently puts the probability of a December rate hike at approximately 50%. Therefore, every hawkish comment from committee members carries considerable weight.

As for the intraday strategy, the focus will primarily be on the implementation of Scenarios #1 and #2.

Buy Scenarios

Scenario #1: The pound can be bought today if the price reaches the entry level around 1.3454 (the green line on the chart), with an upward target at 1.3477 (the thicker green line on the chart). Around 1.3477, the long position can be closed and a short position opened in anticipation of a downward move of 30–35 points from that level. Further gains in the pound today can only be expected as part of a corrective move.

Important! Before opening a long position, make sure that the MACD indicator is above the zero line and is just beginning to move upward from it.

Scenario #2: The pound can also be bought today if the price tests the 1.3440 level twice consecutively while the MACD indicator is in the oversold area. This would limit the pair's downward potential and trigger a reversal to the upside. A rise toward the opposite levels of 1.3454 and 1.3477 can then be expected.

Sell Scenarios

Scenario #1: The pound can be sold today after the 1.3440 level is broken (the red line on the chart), which could trigger a rapid decline in the pair. The sellers' main target will be 1.3418, where the short position can be closed and a long position opened immediately in the opposite direction, targeting a 20–25-point move upward from that level. Negative news could restore downward pressure on the pound.

Important! Before opening a short position, make sure that the MACD indicator is below the zero line and is just beginning to move downward from it.

Scenario #2: The pound can also be sold today if the price tests the 1.3454 level twice consecutively while the MACD indicator is in the overbought area. This would limit the pair's upward potential and trigger a reversal to the downside. A decline toward the opposite levels of 1.3440 and 1.3418 can then be expected.

What the Chart Shows:

• Thin green line – the entry price at which the trading instrument can be bought.
• Thick green line – the estimated price level at which Take Profit orders can be placed or profits can be closed manually, as further gains above this level are considered unlikely.
• Thin red line – the entry price at which the trading instrument can be sold.
• Thick red line – the estimated price level at which Take Profit orders can be placed or profits can be closed manually, as further declines below this level are considered unlikely.
• MACD indicator. When entering the market, it is important to consider the overbought and oversold zones.

Important. Beginner Forex traders should exercise extreme caution when making entry decisions. Before the release of important fundamental reports, it is generally best to stay out of the market to avoid exposure to sharp exchange rate fluctuations. If trading during news releases, always place stop-loss orders to minimize potential losses. Without stop-loss orders, the entire trading account can be depleted very quickly, especially when position sizing is not managed properly and large trading volumes are used.

It is also important to remember that successful trading requires a clearly defined trading plan, such as the one outlined above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for an intraday trader.