Trade Analysis and Tips for Trading the British Pound

The test of the 1.3308 price level in the first half of the day occurred when the MACD indicator had already significantly moved above the zero mark, which limited the pair's upward potential. For this reason, I did not buy the pound and missed the entire upward move.

The PMI data for the UK services sector was revised upward, which led to a strengthening of the pound against the dollar. This came as a pleasant surprise to participants who previously feared a more significant slowdown in the UK economy. The improved PMI figures indicate that the services sector, a key driver of the British economy, is showing more resilience than expected. This, in turn, reduces fears of a potential recession and supports investor confidence in the British pound.

During the U.S. session, the U.S. trade balance figures are expected. Weak results, potentially caused by trade tariffs, may lead to a drop in the dollar. Investors and analysts closely monitor this data as it is an important indicator of the U.S. economy's condition and its global competitiveness. An increase in the trade deficit may signal declining demand for U.S. goods and services, which negatively affects economic growth. The impact of trade tariffs on the trade balance remains a topic of active discussion. On the one hand, tariffs aim to protect domestic producers and stimulate domestic manufacturing. On the other hand, they may raise the cost of imported goods, reduce the competitiveness of U.S. companies, and worsen the trade balance.

As for intraday strategy, I will mainly focus on executing Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today at the entry point around 1.3387 (green line on the chart) with a target of rising to 1.3434 (thicker green line on the chart). Around 1.3434, I plan to exit long positions and open shorts in the opposite direction (expecting a 30–35 point pullback). A rise in the pound today is likely only after weak U.S. data. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise from it.

Scenario #2: I also plan to buy the pound today if there are two consecutive tests of the 1.3359 price level when the MACD indicator is in the oversold zone. This will limit the pair's downward potential and trigger a reversal to the upside. A rise to 1.3387 and 1.3434 can be expected.

Sell Signal

Scenario #1: I plan to sell the pound after breaking below the 1.3359 level (red line on the chart), which will likely trigger a sharp decline in the pair. The key target for sellers will be 1.3310, where I plan to exit shorts and immediately open longs (expecting a 20–25 point rebound). Sellers will step in if the data from the U.S. is strong. Important! Before selling, ensure the MACD indicator is below the zero mark and just starting to fall from it.

Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.3387 level when the MACD indicator is in the overbought zone. This will limit the pair's upward potential and cause a reversal to the downside. A drop toward 1.3359 and 1.3310 can be expected.

Chart Legend:

• Thin green line – entry price for buying the trading instrument;
• Thick green line – expected Take Profit level or area to manually lock in profit, as further growth above this level is unlikely;
• Thin red line – entry price for selling the trading instrument;
• Thick red line – expected Take Profit level or area to manually lock in profit, as further decline below this level is unlikely;
• MACD Indicator – It is important to use overbought and oversold zones as reference when entering trades.

Important: Beginner Forex traders should be extremely cautious when deciding to enter the market. It is best to stay out of the market before important fundamental reports to avoid sharp price swings. If you choose to trade during news releases, always use stop-loss orders to minimize losses. Without stop-losses, you can lose your entire deposit very quickly, especially if you don't use proper money management and trade with large volumes.

And remember, successful trading requires a clear trading plan like the one presented above. Making spontaneous trading decisions based on the current market situation is an inherently losing strategy for intraday traders.