Trade Review and Tips for Trading the British Pound

The price test at 1.3265 occurred as the MACD indicator began moving down from the zero line, confirming a good entry point to sell the pound. As a result, the pair fell toward the target area of 1.3239.

To understand why sterling struggles to regain ground, let's calmly review yesterday's US figures. Initial jobless claims — the number of people filing for benefits for the first time after losing a job — came in at 200K versus a 195K forecast, while continuing claims fell to 1,697K against expectations of 1,720K, so finding work in the US remains relatively easy. But the main event was Federal Reserve commentary. Mary Daly said plainly that rates will need to rise further because price pressures are no longer confined to tariff- or oil-sensitive goods, and firms are increasingly passing costs on to consumers.

Note that the pound enters Friday's session without any UK releases in the first half of the day, leaving it little chance to stop its slide versus the dollar. Even yesterday's GDP figures did not help: September GDP rose 0.2% versus a 0.0% forecast, and Q3 grew 0.7% q/q.

I believe that as long as the divergence in rate expectations favors the dollar, pressure on the pound will persist, and in the second half of the day attention will shift to the US PPI and speeches by Collins and Bowman.

For intraday strategy, I will mainly rely on the implementation of Scenarios No. 1 and No. 2.

Scenarios to Buy

Scenario No. 1: I plan to buy the pound today when the entry point around 1.3238 (green line on the chart) is reached, targeting a rise to 1.3267 (thicker green line on the chart). Around 1.3267, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 pip move away from the level). Expect sterling to rise today only after strong reports. Important! Before buying, make sure the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of 1.3218 while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. You can expect a rise to the opposite levels of 1.3238 and 1.3267.

Scenarios to Sell

Scenario No. 1: I plan to sell the pound today after the 1.3218 level is breached (red line on the chart), which will lead to a rapid decline of the pair. The key target for sellers will be 1.3185, where I will exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip move in the opposite direction from the level). Bad news will restore pressure on the pound. Important! Before selling, make sure the MACD indicator is below the zero line and is just beginning to fall from it.

Scenario No. 2: I also plan to sell the pound today in the event of two consecutive tests of 1.3238 while the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a downward reversal. You can expect a decline to the opposite levels of 1.3218 and 1.3185.

What's on the Chart:

Thin green line – the entry price at which you can buy the trading instrument;

Thick green line – the suggested price where you can place a Take Profit or manually lock in gains, since further upside above this level is unlikely;

Thin red line – the entry price at which you can sell the trading instrument;

Thick red line – the suggested price where you can place a Take Profit or manually lock in gains, since further downside below this level is unlikely;

MACD indicator. When entering the market, it is important to follow the overbought and oversold zones.

Important. Beginner Forex traders must be very cautious when making entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid getting caught in sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you don't use money management and trade large volumes.

Remember, successful trading requires a clear trading plan, like the example I presented above. Spontaneous trading decisions based on the current market situation are a losing strategy for an intraday trader from the start.