Trade Analysis and Tips for the British Pound

The first test of the 1.3406 level occurred when the MACD indicator had already moved far above the zero mark, which limited the pair's upward potential. For this reason, I didn't buy the pound. The second test of 1.3406, when the MACD was in the overbought zone, triggered Sell Scenario #2, resulting in a drop of more than 20 points.

Annual inflation in the UK rose to 3.6%, exceeding economists' forecasts. This provided some support for the pound, but GBP/USD failed to post a major rally. The market appears to be expecting a more dovish stance from the Bank of England, and the pound now needs stronger catalysts for a sustained move higher. Although inflation increased, it wasn't dramatic enough to shift the outlook for monetary policy. Still, rising inflation puts pressure on the Bank of England to seriously consider the possibility of further rate cuts. The next Monetary Policy Committee meeting will be especially important, as policymakers assess whether inflation growth is persistent and what steps are needed to contain it.

In the second half of the day, focus will turn to the U.S. Producer Price Index (PPI), a key indicator of inflationary pressure in the economy. If the data exceeds expectations, it could signal rising inflation and prompt the Federal Reserve to adopt a more aggressive stance on interest rates, which in turn could strengthen the U.S. dollar. Also due today are U.S. industrial production figures, which reflect the state of the manufacturing sector. Growth in this metric indicates economic expansion, typically bullish for the dollar. However, rapid growth may also raise inflation concerns and lead to tighter monetary policy.

As for the intraday strategy, I will continue to rely on the execution of Scenarios #1 and #2.

Buy Signal

Scenario #1:I plan to buy the pound today if the price reaches the entry point around 1.3410 (green line on the chart), targeting a rise to 1.3494 (thicker green line on the chart). Around 1.3445, I will exit the buy position and open a sell position in the opposite direction, aiming for a 30–35 point move down. A rise in the pound today is likely only if U.S. inflation shows a decline.Important: Before buying, ensure that the MACD indicator is above the zero line and just beginning to rise from it.

Scenario #2:I also plan to buy the pound if there are two consecutive tests of the 1.3383 level while the MACD is in the oversold zone. This would limit the pair's downward potential and prompt a reversal to the upside. Targets: 1.3410 and 1.3445.

Sell Signal

Scenario #1: I plan to sell the pound today after the 1.3383 level is broken (red line on the chart), which could quickly send the pair lower. The key target for sellers is 1.3356, where I plan to exit short positions and immediately open long positions, expecting a 20–25 point rebound. Sellers are likely to maintain pressure on the pair if U.S. price data shows a sharp increase.Important: Before selling, ensure that the MACD indicator is below the zero line and just beginning to decline from it.

Scenario #2:I also plan to sell the pound if there are two consecutive tests of the 1.3410 level while the MACD is in the overbought zone. This would limit the pair's upward potential and trigger a downward reversal. Targets: 1.3383 and 1.3356.

Chart Legend:

• Thin green line – Entry price for buying the trading instrument
• Thick green line – Suggested Take Profit level or manual profit-taking zone, as further growth is unlikely beyond this point
• Thin red line – Entry price for selling the trading instrument
• Thick red line – Suggested Take Profit level or manual profit-taking zone, as further decline is unlikely beyond this point
• MACD Indicator – When entering the market, use overbought and oversold zones as guidance

Important:Beginner Forex traders must be very cautious when deciding to enter the market. Before the release of major economic reports, it's best to stay out of the market to avoid sharp price swings. If you choose to trade during news events, always set stop-loss orders to minimize losses. Trading without stop-losses can quickly lead to a total loss of your deposit, especially if you ignore money management and trade large positions.

And remember, successful trading requires a clear plan—like the one I've outlined above. Making spontaneous decisions based on the current market situation is a losing strategy for intraday traders.