Analysis of Trades and Trading Tips for the British Pound

The test of the 1.3475 level occurred just as the MACD indicator began to move downward from the zero line, which confirmed the validity of the entry point for selling the pound and resulted in a drop of over 35 pips.

The pound's decline continues and is linked to the sharp rise in expectations for more aggressive interest rate cuts by the Bank of England. The main reason behind this is the slowdown in the UK's economic growth. Investors are increasingly inclined to believe that the Bank of England will have to ease its monetary policy sooner than previously anticipated to support the weakening economy. Recent data on GDP and inflation suggest that the UK economy is losing momentum. Inflation growth is slowing, which reduces the need for high interest rates, while weak economic activity points to the need for stimulus.

Today's speech by Bank of England Governor Andrew Bailey will provide valuable insight into the central bank's future plans. This event is crucial for understanding the direction of the UK's monetary policy and, consequently, for forecasting the pound's exchange rate dynamics. Market participants will carefully analyze Bailey's every statement, looking for signals of the Bank of England's willingness to continue policy easing. His comments on inflation, economic growth rates, and the labor market will be especially important. Any signs of concern about slowing economic activity or further declines in inflationary pressure could strengthen expectations of an imminent rate cut. On the other hand, if Bailey expresses confidence in the economy's stability and inflation remaining above the target, it may support the pound and reduce the likelihood of rate cuts.

For intraday strategy, I will focus primarily on Scenarios #1 and #2.

Buy Scenario

Scenario #1: Today I plan to buy the pound upon reaching the entry point around 1.3445 (green line on the chart), targeting a rise to 1.3476 (thicker green line). Around the 1.3476 level, I intend to exit long positions and open short positions in the opposite direction, aiming for a 30–35 pip reversal from that level. Any expectation for pound growth today should be seen only as part of a correction.

Important! Before buying, make sure the MACD indicator is above the zero line and just starting to rise from it.

Scenario #2: I also plan to buy the pound today if the 1.3418 level is tested twice in a row while the MACD indicator is in the oversold area. This would limit the pair's downside potential and lead to a market reversal to the upside. A rise toward the opposite levels of 1.3445 and 1.3476 can be expected.

Sell Scenario

Scenario #1: Today I plan to sell the pound after the 1.3418 level is broken (red line on the chart), which should lead to a quick decline of the pair. The key target for sellers will be 1.3383, where I plan to exit short positions and immediately open long positions in the opposite direction, aiming for a 20–25 pip move from that level. Selling the pound on a rise is valid as part of the ongoing bearish trend.

Important! Before selling, make sure the MACD indicator is below the zero line and just starting to decline from it.

Scenario #2: I also plan to sell the pound today if the 1.3445 level is tested twice in a row while the MACD indicator is in the overbought zone. This would limit the pair's upside potential and lead to a downward reversal. A decline toward the opposite levels of 1.3418 and 1.3383 can be expected.

What's on the Chart:

• The thin green line represents the entry price where the trading instrument can be bought.
• The thick green line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price growth above this level is unlikely.
• The thin red line represents the entry price where the trading instrument can be sold.
• The thick red line indicates the expected price level where a Take Profit order can be placed, or profits can be manually secured, as further price decline below this level is unlikely.
• The MACD indicator should be used to assess overbought and oversold zones when entering the market.

Important Notes:

• Beginner Forex traders should exercise extreme caution when making market entry decisions. It is advisable to stay out of the market before the release of important fundamental reports to avoid exposure to sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize potential losses. Trading without stop-loss orders can quickly wipe out your entire deposit, especially if you neglect money management principles and trade with high volumes.
• Remember, successful trading requires a well-defined trading plan, similar to the one outlined above. Making impulsive trading decisions based on the current market situation is a losing strategy for intraday traders.