Trade review and trading tips for the British pound

The price test at 1.3464 occurred when the MACD indicator was just beginning to move down from the zero line, confirming a valid entry point to sell the pound. As a result, the pair fell toward the target level of 1.3434.

US inflation in December rose by 0.3%, coming in above economists' forecasts. This led to a strengthening of the US dollar against the pound. Further developments will depend on several key factors. First, on the persistence of inflationary pressure in the coming months. If inflation remains above the Fed's 2% target, that will strengthen the position of those favoring a cautious monetary stance. Second, on the overall condition of the US economy. A slowdown in growth and a weakening labor market could force the Fed to reconsider its approach toward easing, even if inflation remains above target.

The only significant event today will be a speech by Alan Taylor, a member of the Bank of England's Monetary Policy Committee. Market participants will pay close attention to his comments on the state of the UK economy and possible directions for monetary policy. Mainly, interest will focus on signals about a likely change in the key rate in the foreseeable future, as well as the assessment of the impact of geopolitical factors on the UK economy.

Regarding the intraday strategy, I will mainly rely on implementing scenarios No. 1 and No. 2.

Buy scenarios

Scenario No.1: I plan to buy the pound today at an entry point around 1.3447 (green line on the chart), targeting a rise to 1.3475 (thicker green line on the chart). Around 1.3475, I intend to exit longs and open shorts in the opposite direction (expecting a 30–35 pip counter-move from that level). Expect the pound to strengthen only after Taylor takes a hawkish stance today. Important! Before buying, make sure the MACD indicator is above the zero line and is only beginning to rise from it.

Scenario No.2: I also plan to buy the pound today in case of two consecutive tests of 1.3433 when the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise toward the opposing levels 1.3447 and 1.3475.

Sell scenarios

Scenario No.1: I plan to sell the pound today after a break below 1.3433 (red line on the chart), which would trigger a rapid decline in the pair. The key target for sellers will be 1.3408, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip counter-move from that level). Pound sellers may act if the Bank of England representative takes a dovish stance. Important! Before selling, make sure the MACD indicator is below the zero line and is only beginning to decline from it.

Scenario No.2: I also plan to sell the pound today if there are two consecutive tests of 1.3447, as the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a reversal downward. One can expect a decline toward the opposing levels 1.3433 and 1.3408.

What is on the chart

• Thin green line — entry price at which you can buy the instrument
• Thick green line — suggested Take Profit price or level at which to manually lock in profit, since further rise above this level is unlikely.
• Thin red line — entry price at which you can sell the instrument
• Thick red line — suggested Take Profit price or level at which to manually lock in profit, since further decline below this level is unlikely.
• MACD indicator — when entering the market, it is important to follow the overbought and oversold zones
• Important notes: Beginner forex traders must be very cautious when deciding to enter the market. It is best to be out of the market before major fundamental reports are released to avoid being 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 lose your entire deposit quickly, especially if you do not use money management and trade large volumes.
• Remember that successful trading requires a clear trading plan like the one presented above. Spontaneous trading decisions based on current market noise are a losing strategy for the intraday trader.