Trade Analysis and Tips for the British Pound

The test of the 1.2935 level occurred when the MACD indicator had already moved significantly above the zero line, which limited the pair's upward potential. For this reason, I didn't buy the pound and remained out of the market.

Weak data from the UK manufacturing sector were offset by strong figures in the services sector. Despite economists' concerns, the UK economy continues to show resilience, supported by domestic demand and the flexibility of the services industry. This contrast highlights structural changes in the British economy, where the services sector plays an increasingly important role. However, don't forget that the manufacturing sector still faces challenges, including rising raw material costs and a shortage of skilled labor, which will cap the pound's upward potential.

In the second half of the day, aside from closely watching US economic indicators, investors will focus on speeches by two key FOMC members: Raphael Bostic and Michael S. Barr. Their tone will be a key factor for the further trajectory of the British pound. Only hawkish statements signaling readiness for more aggressive monetary policy could renew pressure on the pound. Otherwise, in the absence of strong signals, the pound may continue to rise—especially if US economic data disappoints and fails to support the dollar.

As for the intraday strategy, I will mainly rely on Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today upon reaching the entry point around 1.2963 (green line on the chart), targeting growth to the 1.3007 level (thicker green line on the chart). Around 1.3007, I'll exit long positions and open short ones in the opposite direction (expecting a 30–35 point pullback from that level). Pound strength today may continue as part of an uptrend. 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 today if there are two consecutive tests of the 1.2935 level, while the MACD is in the oversold zone. This will limit the pair's downward potential and lead to a market reversal upward. A rise to the opposite levels of 1.2963 and 1.3007 can then be expected.

Sell Signal

Scenario #1: I plan to sell the pound today after breaking below the 1.2935 level (red line on the chart), which would lead to a swift decline in the pair. The key target for sellers will be 1.2894, where I'll exit shorts and immediately open long positions in the opposite direction (expecting a 20–25 point rebound). Sellers are likely to step in if US data proves strong. Important! Before selling, ensure that the MACD is below the zero line and just beginning to decline from it.

Scenario #2: I also plan to sell the pound today if there are two consecutive tests of the 1.2963 level while the MACD is in the overbought zone. This will limit the pair's upward potential and trigger a downward reversal. A drop to the opposite levels of 1.2935 and 1.2894 can then be expected.

Chart Elements Explained:

• Thin green line – the entry price for buying the trading instrument;
• Thick green line – the estimated price to set Take Profit or manually secure profit, as further growth above this level is unlikely;
• Thin red line – the entry price for selling the trading instrument;
• Thick red line – the estimated price to set Take Profit or manually secure profit, 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 must be extremely cautious when deciding to enter the market. It's best to stay out of the market before the release of important fundamental reports to avoid sharp price swings. If you decide to trade during news releases, always use stop-loss orders to minimize losses. Without stop-losses, you could quickly lose your entire deposit—especially if you don't practice money management and trade with large volumes.

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