Trade analysis and advice for trading the British pound

The price test of 1.3399 occurred at the moment when the MACD indicator had just begun moving downward from the zero mark, confirming the correct entry point for selling the pound and resulting in a decline toward the target level of 1.3362.

The pound's latest drop confirms its position in a deep bearish market, marked by yet another update of the weekly low. Investors and traders are cautiously watching developments, trying to determine where the bottom lies and when at least some recovery might begin. Economic factors such as inflation, high interest rates, and slowing growth continue to pressure the British currency.

In the second half of the day, the British pound may respond with another decline to speeches from Fed Chair Jerome Powell and FOMC members Michelle Bowman and Michael S. Barr. Statements from key Federal Reserve figures are becoming the decisive factor in shaping expectations for the future path of U.S. interest rates — especially under the current government shutdown conditions. If Powell and other FOMC members strike a hawkish tone, this will likely strengthen the U.S. dollar. Conversely, if Powell and his colleagues adopt a more dovish stance, hinting at possible rate cuts in October even in the absence of key data, the pound may gain short-term support.

As for the intraday strategy, I will rely mainly on Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today around the entry point of 1.3410 (green line on the chart) with a target of rising to 1.3454 (thicker green line on the chart). Around 1.3454, I will exit the buys and open sells in the opposite direction (expecting a 30–35 point move in the reverse direction). A strong rise in the pound today can only be expected after a dovish speech from Powell.Important! Before buying, make sure the MACD indicator is above the zero mark and has just begun rising from it.

Scenario #2: I also plan to buy the pound today if the price tests 1.3369 twice in a row, while the MACD indicator is in oversold territory. This will limit the pair's downward potential and trigger an upward reversal. Growth toward the opposite levels of 1.3410 and 1.3454 can then be expected.

Sell Signal

Scenario #1: I plan to sell the pound today after the price breaks below 1.3369 (red line on the chart), which should lead to a quick decline of the pair. The key target for sellers will be 1.3331, where I will exit the sales and immediately open buys in the opposite direction (expecting a 20–25 point rebound from this level). The pound may fall significantly in the second half of the day.Important! Before selling, make sure the MACD indicator is below the zero mark and has just begun declining from it.

Scenario #2: I also plan to sell the pound today if the price tests 1.3410 twice in a row, while the MACD indicator is in overbought territory. This will limit the pair's upward potential and trigger a downward reversal. A decline toward 1.3369 and 1.3331 can then be expected.

Chart Notes:

• Thin green line – entry price for buying the instrument;
• Thick green line – projected price for setting Take Profit or manually fixing profit, as further growth above this level is unlikely;
• Thin red line – entry price for selling the instrument;
• Thick red line – projected price for setting Take Profit or manually fixing profit, as further decline below this level is unlikely;
• MACD indicator – when entering the market, it is important to use overbought and oversold zones as guidance.

Important: Beginner Forex traders should make market entry decisions very cautiously. Before the release of major fundamental reports, it is best to stay out of the market to avoid sharp price swings. If you decide to trade during news releases, always place stop-loss orders to minimize losses. Without stop-losses, you can quickly lose your entire deposit, especially if you don't use money management and trade with large volumes.

And remember: for successful trading, you need a clear trading plan, like the one I've outlined above. Spontaneous decisions based on the current market situation are an inherently losing strategy for intraday traders.