Trade breakdown and guidance on trading the British pound

The test of the 1.3487 price level occurred at a time when the MACD indicator had already moved significantly above the zero mark, which limited the pair's upward potential. For this reason, I did not buy the pound.

The absence of U.K. statistics allowed pound buyers to show a modest increase. The weakening of the U.S. dollar, amid mixed expectations regarding the Federal Reserve's further policy and the government shutdown, supports the British currency. In the near term, the GBP/USD pair's dynamics will depend on the flow of macroeconomic data from both countries and the rhetoric of central bank officials.

In the second half of the day, data is expected on initial jobless claims and changes in factory orders. FOMC member Lorie K. Logan's speech will also be in focus. Yesterday's unexpectedly weak ADP private-sector employment report raised doubts about the resilience of the U.S. labor market, long considered one of the strongest pillars of the economy. Initial jobless claims will serve as a key indicator of labor market strength, and any deviation from expectations could trigger volatility. High figures may confirm concerns about slowing economic growth, while low figures could somewhat reassure investors.

The change in factory orders is also an important indicator of the manufacturing sector's condition. Growth in orders reflects rising demand and positively impacts economic growth prospects. Lorie K. Logan's speech will give investors an opportunity to assess the Fed's current monetary policy stance, particularly in light of the new data. Her comments may offer clues about the likelihood of further interest rate cuts, which would weaken the dollar even more.

As for intraday strategy, I will focus mainly on implementing Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today at the entry point around 1.3508 (green line on the chart) with the target of rising to 1.3534 (thicker green line on the chart). Around 1.3534, I plan to exit long positions and open shorts in the opposite direction, expecting a 30–35 point pullback. A strong pound rally can be expected after weak U.S. data.Important! Before buying, make sure the MACD indicator is above the zero mark and just starting to rise from it.

Scenario #2: I also plan to buy the pound today in the case of two consecutive tests of the 1.3490 price level, when the MACD indicator is in the oversold area. This will limit the pair's downward potential and trigger a reversal upward. Growth can then be expected toward 1.3508 and 1.3534.

Sell Signal

Scenario #1: I plan to sell the pound today after a break below the 1.3490 level (red line on the chart), which would trigger a quick decline. The key target for sellers will be 1.3466, where I plan to exit shorts and immediately open long positions in the opposite direction, expecting a 20–25 point rebound. The pound could fall sharply in the second half of the day after strong U.S. data.Important! Before selling, make sure the MACD indicator is below the zero mark and just starting to decline from it.

Scenario #2: I also plan to sell the pound today in the case of two consecutive tests of the 1.3508 price level, when the MACD indicator is in the overbought area. This will limit the pair's upward potential and trigger a reversal downward. A decline can then be expected toward 1.3490 and 1.3466.

Chart Legend:

• Thin green line – entry price for buying the instrument.
• Thick green line – suggested price for setting Take Profit or manually fixing profits, as growth beyond this level is unlikely.
• Thin red line – entry price for selling the instrument.
• Thick red line – suggested price for setting Take Profit or manually fixing profits, as a decline beyond this level is unlikely.
• MACD indicator – when entering the market, it is important to rely on overbought and oversold zones.

Important. Beginner Forex traders should make entry decisions very carefully. Before major fundamental reports are released, it is best to stay out of the market to avoid sudden price swings. If you choose to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you neglect money management and trade large volumes.

And remember: successful trading requires a clear trading plan, like the one outlined above. Spontaneous trading decisions based on the current market situation are a losing strategy for an intraday trader from the start.