Trade review and trading tips for the British pound

The price test at 1.3513 occurred when the MACD indicator had moved far below the zero line, limiting the pair's downside potential.

Yesterday the dollar jumped sharply after the US producer-price report, which unambiguously pointed to stronger inflationary pressure. The indicator rose 0.4% in August versus 0.1% in July; annual rates sped up to 5.4% and core to 4.7%. All this significantly strengthened the market's odds of another Federal Reserve rate hike this year.

However, bulls get a chance to fight back today, because in the first half of the day an important block of UK data is released — GDP, industrial production, and the goods trade balance. GDP is key here because it directly reflects growth rates and, via expectations for the Bank of England's rate, sets the pound's direction, while production and the trade balance will complement the picture of the real sector. Recall that the previous GDP report already pointed to a slowdown and growth had been largely carried by services, so today's figures are particularly important to understand whether this fragile dynamic persists.

In my view, sterling can rise only if the data are noticeably better than forecasts, since only a confident positive print can overcome pressure from a stronger dollar. If data disappoint or match expectations, sellers will keep the initiative, especially with the US inflation report still ahead.

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

Buy scenarios

Scenario No. 1: I plan to buy the pound today if the price reaches the entry point around 1.3517 (green line on the chart), targeting a rise to 1.3548 (the thicker green line on the chart). Around 1.3548, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip move from that level). Expect sterling to rise only after good data. Important: before buying, ensure the MACD indicator is above the zero line and only beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today in case of two consecutive tests of 1.3502 while the MACD is in oversold territory. This will limit the pair's downside potential and lead to an upward reversal. One can expect moves to the opposite levels 1.3517 and 1.3548.

Sell scenarios

Scenario No. 1: I plan to sell the pound today after a breach of 1.3502 (red line on the chart), which would lead to a quick decline in the pair. The sellers' key target will be 1.3472, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip reversal from that level). Bad news will restore pressure on the pound. Important: before selling, ensure the MACD indicator is below the zero line and only beginning to fall from it.

Scenario No. 2: I also plan to sell the pound today in case of two consecutive tests of 1.3517 while the MACD is in overbought territory. This will limit the pair's upside potential and trigger a reversal down. Expect a decline to the opposite levels of 1.3502 and 1.3472.

What to Look for on the Chart:

• Thin Green Line – Entry price at which you can buy the trading instrument;
• Thick Green Line – Estimated price where you can set Take Profit or manually secure profits, as further growth above this level is unlikely;
• Thin Red Line – Entry price at which you can sell the trading instrument;
• Thick Red Line – Estimated price where you can set Take Profit or manually secure profits, as further decline below this level is unlikely;
• MACD Indicator. When entering the market, it's important to consider overbought and oversold zones.

Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to stay out of the market ahead of significant fundamental reports to avoid being caught in sharp price fluctuations. If you decide 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 do not employ money management practices and trade large volumes.

Also, remember that successful trading requires a clear trading plan, similar to the one provided above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.