Trade Review and Tips for Trading the British Pound

The test of the 1.3352 level occurred as the MACD indicator began to move up from the zero mark, confirming a good point to buy the pound. As a result, the pair rose toward the 1.3385 target level.

Yesterday, the main news for the pound was the decline in oil and the weakening of the dollar. Rumors that the US would meet some of Tehran's demands, especially on unfreezing funds, were later unconfirmed, limiting the pair's upside potential. But then the pound against the dollar was helped by weak US housing market data. Reports said housing starts fell 5.2% and the pending home sales index plunged 7.3%.

Today the pound's calendar for the first half of the day promises active trading. The market will receive September data on the UK consumer price index and the core consumer price index, then hear a speech from Bank of England Governor Andrew Bailey. The core index is especially interesting because it excludes food and energy, and therefore shows how deeply inflation has taken root in the economy. The reaction could be strong in either direction. If the figures are noticeably below forecasts, expectations for the BoE's rate, which is currently 3.75%, will start to shift toward easing, and the pound could noticeably correct against the dollar. If the data are close to expectations or higher, GBP/USD buyers will have grounds to continue the rise.

Bailey will add clarity. In September, he spoke about central bank independence, and the market saw no policy signals; on October 14, he talked about social networks and did not touch on rates. Today, against the backdrop of fresh inflation data, traders will look to his words for hints about further steps. My assessment is simple. The stronger the figures and the firmer the tone, the more confidently the pound can continue rising.

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

Scenarios for Buying

Scenario No. 1: I plan to buy the pound today when it reaches an entry point around 1.3379 (the green line on the chart), targeting a move to 1.3411 (the thicker green line on the chart). Around 1.3411, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35-pip move away from the level). One can count on the pound rising today after strong data. Important! Before buying, make sure the MACD indicator is above the zero mark and is only beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of the price 1.3365 at a time when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. One can expect a rise to the opposite levels of 1.3379 and 1.3411.

Scenarios for Selling

Scenario No. 1: I plan to sell the pound today after the 1.3365 level is refreshed (red line on the chart), which will lead to a rapid decline in the pair. The sellers' key target is 1.3341, where I intend to exit shorts and immediately open longs in the opposite direction (expecting a 20–25-pip move away from the level). Bad news will put pressure on the pound. Important! Before selling, make sure the MACD indicator is below the zero mark and is only beginning to decline from it.

Scenario No. 2: I also plan to sell the pound today in the event of two consecutive tests of the price 1.3379 at a time when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. One can expect a decline to the opposite levels of 1.3365 and 1.3341.

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.