Trade Analysis and Trading Advice for the British Pound

The test of the 1.3260 price level occurred when the MACD indicator had already moved significantly below the zero line, limiting the pair's downward potential. The second test triggered Scenario #2 for buying the pound, resulting in a gain of only 10 points.

During the first half of the day, the pound lacked any clear catalysts for an advance. Andrew Bailey, Governor of the Bank of England, delivered a speech but avoided discussing monetary policy. Instead, he focused on social media and expressed concern about the lack of control over what happens on these platforms. This topic was neutral for traders. They had expected at least some cautious comments about how far monetary policy tightening might go, but no such remarks were made, and GBP/USD moved lower. It is worth recalling that the Bank of England remains divided over interest rates. Huw Pill, Megan Greene, and Catherine Mann most recently voted in favor of a rate hike, meaning the hawkish faction still has a voice in the committee.

GBP/USD will now be driven almost entirely by developments in the United States. US inflation data will be released shortly, with monthly inflation expected to rise by 0.6% and annual inflation by 3.7%, compared with previous readings of 0.4% and 3.4%, respectively. A higher reading would increase the likelihood of a December rate hike, which the market has already priced in at approximately 80%. For the pound, this would mean additional support for the dollar and further pressure on the pair. In the evening, attention will shift to remarks by Michelle Bowman and Thomas Barkin. The market has recently been highly responsive to comments from Fed officials, as Federal Reserve Chair Kevin Warsh has provided fewer direct signals regarding the future path of interest rates.

As for the intraday strategy, greater emphasis will be placed on implementing Scenarios #1 and #2.

Buy Signal

Scenario #1: Today, the plan is to buy the pound when the price reaches the entry level near 1.3271 (the green line on the chart), targeting a rise to 1.3288 (the thicker green line on the chart). Near 1.3288, the plan is to close long positions and open short positions in the opposite direction, targeting a move of 30–35 points from that level. The pound may rise today if US economic data comes in weaker than expected. Important! Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario #2: The plan is also to buy the pound today if the price tests the 1.3257 level twice consecutively while the MACD indicator is in oversold territory. This would limit the pair's downward potential and trigger an upward market reversal. A rise toward the opposing levels of 1.3271 and 1.3288 can then be expected.

Sell Signal

Scenario #1: Today, the plan is to sell the pound after the price breaks below 1.3257 (the red line on the chart), which could trigger a rapid decline in the pair. The key target for sellers will be 1.3240, where the plan is to close short positions and immediately open long positions in the opposite direction, targeting a 20–25-point move away from that level. Strong selling pressure on the pound is likely to return only if policymakers adopt a hawkish tone. Important! Before selling, make sure the MACD indicator is below the zero line and is just beginning to decline further.

Scenario #2: The plan is also to sell the pound today if the price tests the 1.3271 level twice consecutively while the MACD indicator is in overbought territory. This would limit the pair's upward potential and trigger a downward market reversal. A decline toward the opposing levels of 1.3257 and 1.3240 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 can be placed or profits can be taken 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 can be placed or profits can be taken manually, as further declines below this level are considered unlikely.
• MACD indicator — when entering the market, it is important to consider overbought and oversold conditions.

Important: Beginner Forex traders should exercise great caution when deciding whether to enter the market. Before the release of major 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, an entire trading account can be lost very quickly, especially when risk management rules are ignored and large position sizes are used.

Remember that successful trading requires a clear trading plan, such as the example presented above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for an intraday trader.