Trade Review and Recommendations for the British Pound

The test of the 1.3481 level occurred at a time when the MACD indicator had just begun rising from the zero line, confirming a valid buy entry for the pound. As a result, the pair rose by 15 points.

The increase in U.K. public sector borrowing was interpreted positively by investors, contributing to GBP/USD's rise in the first half of the session. Market participants appear to view this increase in borrowing as a sign of the government's readiness to support the economy, thereby boosting the pound's appeal. However, this interpretation remains somewhat speculative, as the long-term implications of rising public debt for the U.K. economy are still uncertain.

In the second half of the day, attention will turn to the Richmond Fed Manufacturing Index and a speech by Federal Reserve Chair Jerome Powell. Dovish signals could put pressure on the U.S. dollar, leading to renewed demand for the pound. The market is awaiting the Fed's guidance. If Powell signals upcoming rate cuts, the dollar is likely to weaken. In that scenario, the relatively resilient British pound could receive a strong boost. On the other hand, if Powell adopts a hawkish tone and reaffirms the Fed's commitment to controlling inflation, the dollar may strengthen, putting pressure on the pound.

As for intraday strategy, I will mainly focus on implementing Scenario #1 and Scenario #2.

Buy Signal

Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.3501 (green line on the chart), targeting a rise to 1.3531 (thicker green line on the chart). At 1.3531, I will exit long positions and open short positions in the opposite direction, expecting a 30–35 point correction. A strong rally in the pound today depends on a dovish Powell. Important: Before buying, ensure the MACD indicator is above the zero line and just starting to rise.

Scenario #2: I also plan to buy the pound in case of two consecutive tests of the 1.3480 level while the MACD is in the oversold zone. This would limit the downward potential and likely trigger a reversal upward, with expected targets at 1.3501 and 1.3531.

Sell Signal

Scenario #1: I plan to sell the pound after the price breaks below 1.3480 (red line on the chart), which could lead to a quick decline. The key target for sellers will be 1.3448, where I will exit short positions and consider buying in the opposite direction, aiming for a 20–25 point rebound. Sellers will be active if Powell maintains a hawkish stance. Important: Before selling, ensure the MACD indicator is below the zero line and just beginning to decline.

Scenario #2: I also plan to sell the pound today in case of two consecutive tests of the 1.3501 level while the MACD is in the overbought zone. This would limit the upward potential and likely lead to a reversal downward, with expected targets at 1.3480 and 1.3448.

What's on the chart:

• Thin green line – Entry price for buying the instrument
• Thick green line – Suggested Take Profit or target area, as further growth above this level is unlikely
• Thin red line – Entry price for selling the instrument
• Thick red line – Suggested Take Profit or target area, as further decline below this level is unlikely
• MACD indicator – Use overbought and oversold zones when entering trades

Important Note for Beginner Traders:

Forex beginners should be especially cautious when deciding to enter the market. It is best to stay out of the market before key economic reports are released, in order to avoid sharp price fluctuations. If you choose to trade during such events, always set stop-loss orders to minimize potential losses. Without stop-losses, your entire deposit can be quickly lost—especially if you trade large volumes and do not follow proper money management.

Remember: successful trading requires a clear trading plan like the one provided above. Making spontaneous decisions based on short-term market behavior is generally a losing strategy for intraday traders.