Trade Analysis and Trading Advice for the British Pound

The test of 1.3517 occurred when the MACD indicator had already moved significantly above the zero line, which limited the pair's upward potential. The same situation, but in the opposite direction, occurred at 1.3502.

The pound rose after the UK economy grew by 0.4% in July. On an annual basis, growth reached 1.6%. However, the composition of growth is more interesting. Services increased by 0.4% month-on-month, production by 0.2%, and construction by 0.1%, while over the three-month period, production and construction both declined by 0.5%. GDP growth was driven by programming and consultancy, which increased by 3.5% month-on-month and contributed 0.12 percentage points to GDP, meaning that almost one-third of the monthly increase came from a single sector. The report explicitly noted that many of the companies with the highest turnover in this segment are involved in artificial intelligence and cloud computing.

The next direction for the pound will be determined by US inflation, as the British currency has no significant domestic catalysts, while the GDP report released this morning has already been priced in. I expect inflation to come in above economists' forecasts. Under these conditions, the pound remains dependent on external factors. Strong inflation will restore demand for the dollar and could push GBP/USD lower, especially since the pair's recent rise was driven mainly by US dollar weakness caused by interventions. A weak report, on the other hand, would return the initiative to buyers. The University of Michigan's consumer sentiment and inflation expectations indexes will also be released and could amplify the market reaction. I expect no decisive trend to develop for the pound before the Fed meeting, while today I anticipate a sharp but possibly short-lived move.

As for the intraday strategy, I will focus primarily on scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, I plan to buy the pound when the entry price reaches around 1.3517 (the green line on the chart), with a target of rising toward 1.3548 (the thicker green line on the chart). Around 1.3548, I will exit the long position and open a short position in the opposite direction, targeting a move of 30–35 points in the opposite direction from the level. The pound can be expected to rise today only if the US data are weak. Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today if the price tests 1.3497 twice consecutively while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to an upward reversal. A rise toward the opposite levels of 1.3517 and 1.3548 can be expected.

Sell Signal

Scenario No. 1: Today, I plan to sell the pound after the 1.3497 level is broken (the red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be 1.3464, where I will exit the short position and immediately open a long position in the opposite direction, targeting a move of 20–25 points in the opposite direction from the level. Strong pressure on the pound will return if the US economic data are strong. Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound today if the price tests 1.3517 twice consecutively while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a downward reversal. A decline toward the opposite levels of 1.3497 and 1.3464 can be expected.

What the Chart Shows:

• Thin green line – the entry price at which the trading instrument can be bought;
• Thick green line – the projected price at which Take Profit orders can be placed or profits can be closed manually, as further growth above this level is unlikely;
• Thin red line – the entry price at which the trading instrument can be sold;
• Thick red line – the projected price at which Take Profit orders can be placed or profits can be closed manually, as further decline below this level is unlikely;
• MACD indicator. When entering the market, it is important to take the overbought and oversold zones into account.

Important. Beginner Forex traders should be very cautious when making market-entry decisions. Before the release of important fundamental reports, it is best to stay out of the market to avoid being caught in sharp price fluctuations. If you decide to trade during a news release, always use stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember that successful trading requires a clear trading plan, such as the one presented above. Making trading decisions spontaneously based on the current market situation is an inherently losing strategy for an intraday trader.