Trade Analysis and Tips for Trading the British Pound

The price test at 1.3535 occurred when the MACD indicator was beginning to move upward from the zero mark, confirming the correct entry point for buying the pound. As a result, the pair rose by 10 pips.

U.S. industrial production increased, rising 0.2% month-on-month and 1.1% year-on-year; however, the report's structure was extremely uneven. The housing sector only intensified the market's contradictions. Building permits rose to 1.44 million, but actual housing starts plummeted by 12.4% to 1.24 million. The British pound took advantage of the dollar's inability to benefit from mixed data. The GBP/USD pair held its ground, as the mixed nature of the reports did not give the U.S. currency any reason to strengthen.

Today, the British currency enters the first half of the day with an eye on the key inflation report, which will include the consumer price index (CPI), core index, and retail price index. Inflation data carries particular weight for the pound, as it shapes expectations for the Bank of England's policy, and the core measure is valued higher because it reflects persistent price pressure excluding volatile components. The market will react primarily to deviations between actual figures and forecasts. The situation is made more acute by the central bank's dilemma. The BoE must navigate a weakening labor market, as noted earlier, and ongoing price increases, with high inflation complicating the balance. For the GBP/USD pair, strong inflation data could provide support, as it would strengthen arguments against easing policy, while slowing prices would weaken the pound and give the BoE reasons to pause.

Regarding the intraday strategy, I will focus more on implementing scenarios No. 1 and No. 2.

Buy Scenarios

• Scenario No. 1: I plan to buy the pound today when the price reaches around 1.3545 (green line on the chart), targeting a rise to 1.3565 (thicker green line on the chart). At around 1.3565, I plan to exit my long positions and sell in the opposite direction, expecting movement of 30-35 pips from the entry point. Today's growth in the pound can be anticipated to follow the trend. Important! Before buying, ensure that the MACD indicator is above the zero mark and is just starting its rise from it.
• Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of 1.3533 when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. Growth can be expected towards the opposite levels of 1.3545 and 1.3565.

Sell Scenarios

• Scenario No. 1: I plan to sell the pound today after updating the level of 1.3533 (red line on the chart), which will lead to a rapid decline of the pair. The key target for sellers will be 1.3515, where I plan to exit my short positions and immediately buy in the opposite direction, expecting 20-25 pips in the opposite direction from the level. Only bad news will bring pressure back on the pound. Important! Before selling, ensure that the MACD indicator is below the zero mark and is just starting its decline from it.
• Scenario No. 2: I also plan to sell the pound today in the event of two consecutive tests of 1.3545 when the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a downward market reversal. A decline can be expected towards the opposite levels of 1.3533 and 1.3515.

What the Chart Shows:

• Thin green line – entry price for buying the trading instrument;
• Thick green line – estimated price where take profit can be set, or profit can be realized, as further growth above this level is unlikely;
• Thin red line – entry price for selling the trading instrument;
• Thick red line – estimated price where take profit can be set, or profit can be realized, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it is important to be guided by overbought and oversold zones.

Important: Beginner forex traders need to make entry decisions very cautiously. Before key fundamental reports are released, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not practice money management and trade large volumes.

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