Trade Analysis and Tips for Trading the British Pound

The test of the 1.3514 level occurred when the MACD indicator had just started moving downward from the zero line, confirming a valid entry point for selling the pound. As a result, the pair declined toward the target level of 1.3488.

The UK labor market presented a mixed picture in the latest reporting period. On one hand, encouraging data showed that the overall unemployment rate fell to 4.9%, which is a positive signal reflecting a recovery in economic activity after previous downturns. However, alongside this positive trend, data on new unemployment benefit claims came in significantly higher than expected. This indicator, which reflects current labor market trends and layoffs, showed an unexpected increase. The rise in claims may indicate ongoing problems in certain sectors of the economy or new obstacles to employment, despite the overall decline in unemployment.

Next, we await US data on retail sales and pending home sales. Retail sales directly reflect consumer activity, a key driver of GDP growth. Unexpectedly strong data could strengthen the US dollar. Meanwhile, pending home sales serve as a leading indicator for the real estate market, with their dynamics signaling future sales levels.

Kevin Warsh's speech in the Senate will be the most important event of the day. As a candidate for Federal Reserve Chair, his remarks will be closely analyzed for signals about future monetary policy. Any hints regarding interest rate changes, quantitative easing or tightening programs, as well as his view on current economic challenges amid a complex geopolitical environment, could trigger significant volatility in the currency market.

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

Buy Signal

Scenario No. 1: I plan to buy the pound today upon reaching the entry point around 1.3510 (green line on the chart), targeting a rise to 1.3531 (thicker green line). Around 1.3531, I plan to exit long positions and open short positions in the opposite direction (targeting a 30–35 point move). The pound can rise today within the broader bullish market.Important: Before buying, make sure the MACD indicator is above the zero line and just beginning to rise.

Scenario No. 2: I also plan to buy the pound if there are two consecutive tests of the 1.3501 level while the MACD indicator is in the oversold zone. This would limit the pair's downward potential and lead to an upward reversal. Growth toward 1.3510 and 1.3531 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound after a break below the 1.3501 level (red line on the chart), which could trigger a sharp decline. The key target for sellers will be 1.3476, where I plan to exit short positions and open long positions in the opposite direction (targeting a 20–25 point move). Pressure on the pound may return if Warsh takes a hawkish stance.Important: Before selling, make sure the MACD indicator is below the zero line and just starting to decline.

Scenario No. 2: I also plan to sell the pound if there are two consecutive tests of the 1.3510 level while the MACD indicator is in the overbought zone. This would limit the pair's upward potential and lead to a downward reversal. A decline toward 1.3501 and 1.3476 can be expected.

Chart Notes

• Thin green line – entry price for buying
• Thick green line – estimated Take Profit level or area to lock in profits, as further growth above this level is unlikely
• Thin red line – entry price for selling
• Thick red line – estimated Take Profit level or area to lock in profits, as further decline below this level is unlikely
• MACD Indicator – when entering the market, it is important to consider overbought and oversold zones

Important: Beginner Forex traders should make market entry decisions with extreme caution. It is best to stay out of the market before major fundamental reports are released 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 quickly lose your entire deposit, especially if you do not use proper money management and trade large volumes.

And remember: successful trading requires a clear trading plan, like the one outlined above. Spontaneous decision-making based on current market conditions is a losing strategy for intraday traders.