Trade review and tips for trading the British pound

The price test at 1.3292 occurred as the MACD indicator began moving up from the zero line, confirming a valid entry point to buy the pound. As a result, the pair rose toward the target area near 1.3330.

Yesterday the market greeted the U.K. budget with a yawn, and the pound showed it. John Healey, who became Chancellor only recently, presented his first budget with no surprises, made no promises the government cannot fund, and largely preserved his predecessor's fiscal stance. The pound then received support after the Federal Reserve meeting. The U.S. central bank left the policy rate at 3.75%–4.00%; two members, Lisa Cook and Beth Hammack, voted for a hike. Warsh called inflation high but offered no concrete guidance on December. This morning attention shifts to lending data: forecasts call for 54.0k mortgage approvals (54.9k prior), £6.2bn net lending to individuals (6.9bn prior) and M4 growth of 0.3% (0.4% prior). Stronger prints would reinforce odds of future rate hikes. I believe that after a quiet budget, GBP/USD will track rate expectations for the Bank of England and the Fed.

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

Scenarios for Buying

Scenario No. 1: I plan to buy the pound today at an entry around 1.3320 (the green line on the chart), targeting 1.3344 (the thicker green line on the chart). Around 1.3344, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35-pip move from that level). You can count on the pound rising today only after strong data. Important! Before buying, make sure the MACD indicator is above zero and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today if it tests 1.3303 twice in a row while the MACD indicator is in the oversold area. This will limit the pair's downside potential and trigger an upward reversal. One can expect a rise to the opposite levels of 1.3320 and 1.3344.

Scenarios for Selling

Scenario No. 1: I plan to sell the pound today after 1.3303 is refreshed (red line on the chart), which will lead to a rapid decline of the pair. The sellers' key target will be 1.3273, where I intend to exit shorts and immediately open longs in the opposite direction (expecting a 20–25-pip move from that level). Bad news will return pressure on the pound. Important! Before selling, make sure the MACD indicator is below zero 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 1.3320 when the MACD indicator is in the overbought area. This will limit the pair's upside potential and lead to a downward reversal. One can expect a decline to the opposite levels of 1.3303 and 1.3273.

What's on the chart:

Thin green line — entry price where you can buy the instrument.

Thick green line — approximate price where you can place Take Profit or manually lock in profits, because further upside above this level is unlikely.

Thin red line — entry price where you can sell the instrument.

Thick red line — approximate price where you can place Take Profit or manually lock in profits, because further downside below this level is unlikely.

MACD indicator. When entering the market, it's important to consider overbought and oversold zones.

Important. Novice Forex traders must be very cautious when deciding to enter the market. It is best to stay out before major fundamental reports 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 above. Spontaneous trade decisions based solely on the immediate market situation are, by definition, a losing strategy for an intraday trader.