Trade Review and Recommendations for Trading the British Pound

The price test at 1.3530 earlier in the day coincided with the MACD indicator just beginning to move down from the zero line. This confirmed a valid entry point for selling the pound and resulted in a drop of the pair toward the target level of 1.3494.

Rather weak UK labor market data put pressure on the pound. The unemployment rate rose, as did the number of jobless claims. This negative signal undoubtedly prompted investors to reassess their positions on the British currency. The labor market is a key indicator of economic health, and an increase in unemployment and claims for benefits points to potential problems. It could indicate a slowdown in business activity, reduced investment, and ultimately a risk of recession. The pound's reaction was entirely expected.

Today's NFIB Small Business Optimism Index from the U.S. is unlikely to significantly help the dollar rise further against the pound. Current U.S. macroeconomic indicators, even if positive, may be overshadowed by geopolitical factors. Small business sentiment is certainly important for the domestic economy, but its influence on global currency flows is limited compared to the prevailing role of political news. It's best to monitor the progress of U.S.-China trade negotiations before drawing any conclusions.

As for intraday strategy, I'll focus primarily on executing Scenario #1 and Scenario #2.

Buy Signal

Scenario #1:I plan to buy the pound today upon reaching the entry point around 1.3513 (green line on the chart) with a target of rising to 1.3541 (thicker green line on the chart). At 1.3541, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 point pullback). A bullish move in the pound today is more likely after disappointing trade talks. Important! Before buying, make sure the MACD indicator is above the zero line and just starting to rise.

Scenario #2:I also plan to buy the pound today in the event of two consecutive tests of the 1.3490 price level while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and may lead to a reversal upward. A rise toward the opposite levels of 1.3513 and 1.3541 can be expected.

Sell Signal

Scenario #1:I plan to sell the pound after a breakout below 1.3490 (red line on the chart), which may trigger a sharp drop in the pair. The main target for sellers will be 1.3440, where I will exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 point pullback). Sellers are likely to show up in the event of strong data.Important! Before selling, make sure the MACD indicator is below the zero line and just starting to decline.

Scenario #2:I also plan to sell the pound today if there are two consecutive tests of the 1.3513 price level while the MACD is in the overbought zone. This will limit the pair's upward potential and may lead to a downward reversal. A drop toward the opposite levels of 1.3490 and 1.3440 can be expected.

Chart Legend:

• Thin green line – entry price for buying the trading instrument
• Thick green line – projected price to set Take Profit or manually secure profits, as further growth above this level is unlikely
• Thin red line – entry price for selling the trading instrument
• Thick red line – projected price to set Take Profit or manually secure profits, as further decline below this level is unlikely
• MACD indicator – important to follow overbought and oversold zones when entering the market

Important: Beginner Forex traders should exercise great caution when making market entry decisions. It is best to stay out of the market ahead of key fundamental reports to avoid sharp price swings. If you decide to trade during news events, always place stop-loss orders to minimize losses. Without stop orders, you could quickly lose your entire deposit, especially if you don't use money management and trade large volumes.

And remember, successful trading requires a clear trading plan—such as the one outlined above. Spontaneous decision-making based on the current market situation is fundamentally a losing strategy for intraday traders.