Trade review and tips for trading the British pound

The price test at 1.3501 occurred when the MACD indicator was just beginning to move up from the zero mark, confirming the correct entry point to buy the pound. As a result, the pair rose and exceeded the target level of 1.3523, allowing about 30 pips of profit to be taken.

A strong US services report would have set the tone on any other day, but this time the dollar ignored it. The ISM Services index rose to 55.4, business activity jumped to its highest since November 2022, and new orders showed their best reading in almost two and a half years. It is encouraging that the share of firms cutting staff fell from 19% to 17.1%, although employment remained in contraction. Overall, the services economy looks robust, and I think this signal should not be underestimated. The pound nevertheless strengthened against the dollar because the US currency weakened under pressure from currency intervention. The US and the Bank of Japan actively entered the market, and those actions offset the report's positive impact, depriving the dollar of support.

Today the British currency will spend the first half of the day without domestic drivers, as no UK data are scheduled; attention will focus on Bank of England Governor Andrew Bailey's remarks. I do not expect new policy signals from him, but his assessment of recent price and labor market data can set the tone for the pair. Given recent reports showing accelerating services inflation alongside weakening employment, the governor's comments could tilt the balance either way. In my view, a cautious stance would quickly reapply pressure to GBP/USD by reducing expectations of imminent tightening, while emphasizing inflation risks would support the pound.

As for the intraday strategy, I will rely mainly on execution of Scenarios No. 1 and No. 2.

Buy scenarios

Scenario No. 1: I plan to buy the pound today if the entry point around 1.3547 (the green line on the chart) is reached, with a target to rise to 1.3572 (the thicker green line on the chart). Around 1.3572, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip move in the opposite direction from that level). Expect pound strength today only after strong data. Important! Before buying, make sure the MACD indicator is above the zero mark and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of 1.3530, with the MACD indicator in an oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise toward the opposite levels of 1.3547 and 1.3572.

Sell scenarios

Scenario No. 1: I plan to sell the pound today after the 1.3530 level (the red line on the chart) is breached, which will trigger a quick decline in the pair. The key target for sellers will be 1.3505, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip move in the opposite direction from that level). Bad news will bring pressure back on the pound. Important! Before selling, make sure the MACD indicator is below the zero mark and is just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound today if there are two consecutive tests of 1.3547 while the MACD indicator is in an overbought area. This will limit the pair's upside potential and lead to a downward reversal. One can expect a decline toward the opposite levels of 1.3530 and 1.3505.

What to Look for on the Chart:

• Thin Green Line – Entry price at which you can buy the trading instrument;
• Thick Green Line – Estimated price where you can set Take Profit or manually secure profits, as further growth above this level is unlikely;
• Thin Red Line – Entry price at which you can sell the trading instrument;
• Thick Red Line – Estimated price where you can set Take Profit or manually secure profits, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it's important to consider overbought and oversold zones.

Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to stay out of the market ahead of significant fundamental reports to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not employ money management practices and trade large volumes.

Also, remember that successful trading requires a clear trading plan, similar to the one provided above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.