Trade Analysis and Tips for Trading the British Pound

The test of the 1.3416 level occurred when the MACD indicator was just beginning to move downward from the zero line, confirming a correct entry point for selling the pound. However, the pair did not proceed to decline.

Data on activity in the UK construction sector came in slightly better than economists' forecasts, which limited the pound's downward potential. However, a reading below 50 still indicates contraction in the sector. This is due to the continued impact of high interest rates, which make mortgages less affordable and reduce demand for new housing. Thus, despite the slight improvement relative to expectations, the overall tone of the data remains concerning. The construction sector is an important indicator of economic health, and its continued contraction puts pressure on the British pound.

During the US session, the minutes of the latest Federal Reserve monetary policy meeting are expected to be released. Given the context, this document will likely carry a fairly hawkish tone, reflecting concerns about inflation and a desire to bring it down quickly. However, some of this "hawkishness" may be softened by recent developments, such as news from the Middle East and the apparent pause in escalating tensions between the US and Iran. Additional insight into the Fed's policy outlook will come from speeches by Federal Open Market Committee members. In particular, statements from Christopher Waller—known for his hawkish stance—and Mary Daly, who may offer a more balanced or cautious perspective, are expected. Their comments, made after the meeting, will act as a kind of filter for interpreting the minutes.

As for the intraday strategy, I will rely more on the implementation of scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: I plan to buy the pound today upon reaching the entry point around 1.3446 (green line on the chart), with a target at 1.3526 (thicker green line). Around 1.3526, I plan to exit long positions and open short positions in the opposite direction (expecting a 30–35 point move). Further growth of the pound can be expected within a strong 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 today if there are two consecutive tests of the 1.3416 level while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to an upward reversal. Growth toward the opposite levels of 1.3446 and 1.3526 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound after an update (break below) of the 1.3416 level (red line on the chart), which may lead to a quick decline in the pair. The key target for sellers will be 1.3373, where I plan to exit short positions and open long positions in the opposite direction (expecting a 20–25 point move). Pressure on the pound is unlikely to return today.Important! Before selling, make sure the MACD indicator is below the zero line and just beginning to decline.

Scenario No. 2: I also plan to sell the pound today if there are two consecutive tests of the 1.3446 level while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a downward reversal. A decline toward the opposite levels of 1.3416 and 1.3373 can be expected.

What's on the Chart

• Thin green line – entry price for buying the trading instrument;
• Thick green line – estimated level for placing Take Profit or manually locking in profits, as further growth above this level is unlikely;
• Thin red line – entry price for selling the trading instrument;
• Thick red line – estimated level for placing Take Profit or manually locking 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 very carefully. Before the release of important fundamental reports, it is best to stay out of the market to avoid sharp price fluctuations. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss orders, you can quickly lose your entire deposit, especially if you do not use proper money management and trade large volumes.

Remember that successful trading requires a clear trading plan, like the one outlined above. Spontaneous decision-making based on the current market situation is inherently a losing strategy for intraday traders.