Trade Analysis and Tips for Trading the British Pound

The price test at 1.3382 occurred at a moment when the MACD indicator was just beginning to move downward from the zero line, which confirmed a valid entry point for selling the pound. However, a major decline in the pair did not materialize, and trading remained within a narrow sideways range.

Today, the United Kingdom released April inflation data that exceeded forecasts. The reaction of the British pound was predictable — an initial decline followed by a recovery. According to the report, the Consumer Price Index rose by 2.8% year-on-year, compared to 3.3% in March. Analysts had expected a slowdown only to 3.0%.

Although this data may initially appear positive, it is important to understand that this is most likely a short-term effect rather than a sign of a sustained trend change.

Next, we await the publication of the minutes from the previous Federal Reserve meeting, as well as a speech by FOMC member Michael S. Barr. The release of the Fed minutes is a key event for financial markets, as traders always carefully analyze it for signals about future monetary policy. Particular attention is paid to discussions regarding inflation, economic growth, and the labor market, as well as any disagreements among FOMC members. A hawkish tone in the minutes would support the U.S. dollar.

As for the intraday strategy, I will rely more on scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today I plan to buy the pound when the entry point is reached around 1.3395 (green line on the chart), targeting growth toward 1.3422 (thicker green line on the chart). At 1.3422, I will exit long positions and open shorts in the opposite direction (expecting a 30–35 point reversal). Growth in the pound today is only possible after weak U.S. data.Important: Before buying, ensure that the MACD is above the zero line and just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound if there are two consecutive tests of 1.3377 while the MACD is in oversold territory. This would limit downward potential and trigger a reversal upward. A move toward 1.3395 and 1.3422 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound after a break below 1.3377 (red line on the chart), which should lead to a quick decline. The key target for sellers is 1.3351, where I will exit shorts and immediately open longs in the opposite direction (expecting a 20–25 point reversal). Selling pressure will return with strong U.S. data.Important: Before selling, ensure that the MACD is below the zero line and just beginning to decline from it.

Scenario No. 2: I also plan to sell the pound if there are two consecutive tests of 1.3395 while the MACD is in overbought territory. This would limit upward potential and trigger a reversal downward. A decline toward 1.3377 and 1.3351 can be expected.

What Is on the Chart:

• Thin green line – entry price for buying the trading instrument
• Thick green line – expected take-profit level or area to secure profits, as further gains above this level are unlikely
• Thin red line – entry price for selling the trading instrument
• Thick red line – expected take-profit level or area to secure profits, as further declines below this level are unlikely
• MACD indicator – trading decisions should consider overbought and oversold zones

Important Note

Beginner Forex traders should be extremely cautious when entering the market. Before major fundamental reports are released, it is best to stay out of the market to avoid sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you do not use proper money management and trade large volumes.

And remember: successful trading requires a clear trading plan, like the one presented above. Spontaneous trading decisions based on current market conditions are fundamentally a losing strategy for intraday traders.