Thursday's Trade Analysis:

1H chart of GBP/USD.

The GBP/USD pair failed to extend its upward movement on Thursday, despite having every reason to do so. Yesterday, the Bank of England held its penultimate meeting of the year, during which the key interest rate was raised for the first time in several years. This decision by the British regulator did not come as a surprise to the market. However, the Monetary Policy Committee voted unanimously in favor of the increase, whereas traders had expected only 7 out of 9 members to support the rate hike. This did not change the Bank of England's decision itself, but it did indicate a more hawkish stance from the central bank than the market had anticipated. Thus, the pound had every opportunity to continue its upward trend on the hourly chart but ultimately took a short pause. The outlook remains bullish for the British currency, with a potential advance to at least the 1.3650 level. Today, GBP/USD movements will depend on the US unemployment and labor market reports.

5M chart of GBP/USD.

No trading signals were formed on the 5-minute timeframe on Thursday. During the European trading session, the price declined to the 1.3456–1.3476 level and remained mostly within this range for the rest of the day. No clear consolidation above or below this area occurred. There was virtually no market reaction to the Bank of England's hawkish meeting.

How to Trade on Friday:

On the hourly timeframe, GBP/USD continues to develop an upward trend. Overall, the British pound is trading much more logically than the euro, giving it a good chance of extending its upward movement. The technical picture across almost all timeframes supports further gains in the British currency. Fundamental factors and the US dollar's overbought condition also support further growth in GBP/USD.

On Friday, beginner traders may consider short positions targeting 1.3380–1.3386 if the price consolidates below the 1.3456–1.3476 level. Long positions may be opened with a target of 1.3587–1.3598 if the price consolidates above the 1.3456–1.3476 level.

On the 5-minute timeframe, trading can currently be considered around the following levels: 1.3043, 1.3096–1.3107, 1.3175–1.3180, 1.3259–1.3267, 1.3319–1.3331, 1.3380–1.3386, 1.3456–1.3476, 1.3587–1.3598, and 1.3631–1.3641. There are no economic events scheduled in the UK on Friday. However, the United States will release important reports on the labor market, unemployment, and consumer sentiment. These reports could trigger a strong market reaction, which will depend entirely on how the actual figures compare with forecasts.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time required for it to form (a rebound or a break of a level). The less time required, the stronger the signal.
2. If two or more trades based on false signals have been opened near a particular level, all subsequent signals from that level should be ignored.
3. During sideways trading, any currency pair may generate numerous false signals or none at all. Technical levels may be ignored.
4. On the hourly timeframe, it is advisable to trade MACD indicator signals only when volatility is sufficiently high and a trend is confirmed by a trendline or trend channel.
5. If two levels are located too close to each other (within 5–20 points), they should be treated as a single support or resistance area.
6. Once the price has moved 15 points in the favorable direction, the Stop Loss should be moved to breakeven.

What the Charts Show:

Price support and resistance levels (areas) – levels that serve as targets for opening buy or sell positions or as sources of trading signals.

Red lines – represent channels or trendlines that show the current trend and indicate the preferred trading direction.

The MACD (14, 22, 3) indicator — its histogram and signal line — is an auxiliary indicator that can also be used to generate trading signals.

Important speeches and economic reports (listed in the economic calendar) can have a significant impact on currency pair movements. Therefore, trading should be approached with extreme caution during their release, or positions should be closed to avoid a sharp price reversal against the preceding movement.

Beginner Forex traders should remember that not every trade can be profitable. Developing a clear trading strategy and applying proper money management are essential to achieving long-term trading success.