Trade Analysis and Trading Recommendations for the British Pound

The first test of the 1.2439 level occurred when the MACD indicator had already moved significantly downward from the zero mark, limiting further downward potential. As a result, I decided not to sell the pound.

Later, after the U.S. economic data release, another test of 1.2439 took place, coinciding with the MACD beginning to move downward from the zero mark. This confirmed a valid sell entry, leading the pair to fall to the target level of 1.2392.

The strengthening of the U.S. dollar, supported by the Federal Reserve's hawkish stance and positive macroeconomic data, is weighing on the British pound. Expectations for prolonged high U.S. interest rates (reinforced by last Friday's U.S. labor market report) make dollar-denominated assets more attractive. This leads to capital outflows from the UK and reduces demand for the pound.

The Bank of England's efforts to curb inflation may be insufficient to offset the interest rate gap between the U.S. and the UK. Concerns about a UK recession, driven by high prices, further undermine investor confidence in the pound.

With no major economic reports from the UK, buyers of the pound have no fundamental support today. This increases market risks, as trading will be influenced solely by external factors and overall risk sentiment.

Any statements from Donald Trump could spark a fresh wave of selling in risk assets, including the pound. The market's reaction to U.S. economic data and geopolitical risks will shape GBP/USD movement.

Intraday Trading Strategy for GBP/USD

For today's trading, I will focus on Scenario #1 and Scenario #2.

Buy Scenarios

Scenario #1: Buy GBP/USD at 1.2418 (green line on the chart) with a target of 1.2444. In the area of 1.2444, I'm going to exit purchases and open sales in the opposite direction (counting on a movement of 30-35 points in the opposite direction from the level). It is possible to count on the growth of the pound only within the framework of the correction. Important! Before buying, make sure that the MACD indicator is above the zero mark and is just starting to grow from it.

Scenario #2: Buy GBP/USD if there are two consecutive tests of 1.2394 while MACD is in the oversold zone. Target levels: 1.2418 and 1.2444.

Sell Scenarios

Scenario #1: Sell GBP/USD after breaking below 1.2394 (red line on the chart). The key target of sellers will be the 1.2364 level, where I'm going to exit sales, as well as immediately open purchases in the opposite direction (counting on a movement of 20-25 points in the opposite direction from the level). It is better to sell the pound as high as possible. Important! Before selling, make sure that the MACD indicator is below the zero mark and is just beginning its decline from it.

Scenario #2: Sell GBP/USD if there are two consecutive tests of 1.2418 while MACD is in the overbought zone. Target levels: 1.2394 and 1.2364.

Chart Explanation

• Thin green line – Recommended buy entry point.
• Thick green line – Expected resistance level where profit-taking is advised.
• Thin red line – Recommended sell entry point.
• Thick red line – Expected support level where profit-taking is advised.
• MACD Indicator – Used to identify overbought and oversold conditions.

Important. Novice forex traders need to make their entry decisions very carefully. Before the release of important fundamental reports, it is best to stay out of the market in order to avoid falling into sharp fluctuations in the exchange rate. If you decide to trade during the news release, always place stop orders to minimize losses. Without placing stop orders, you can lose your entire deposit very quickly, especially if you do not use money management, but trade in large volumes.

And remember that for successful trading it is necessary to have a clear trading plan, following the example of the one I presented above. Spontaneous decision-making based on the current market situation is an inherently losing strategy for an intraday trader.