Trade breakdown and trading tips for the British pound

Due to the low volatility of the pound, the levels I identified in the first half of the day were not tested.

The pound showed slight strengthening amid positive macroeconomic news, receiving support from the latest housing price dynamics report. Financial markets welcomed this data with optimism, which was immediately reflected in the national currency's exchange rate. A report from Halifax, one of the UK's leading mortgage lenders, showed a solid 0.7% increase in the house price index over the reporting period. Rising housing prices generally correlate with growing household wealth and their willingness to spend.

In the second half of the day, the market's attention will be focused on the release of a number of important macroeconomic indicators capable of setting the tone for further trading. The spotlight will be on the University of Michigan Consumer Sentiment Index, which is traditionally considered a barometer of consumer confidence and, consequently, willingness to spend. High readings of the indicator may signal positive expectations among households regarding the future. Alongside the sentiment index, traders will also pay close attention to inflation expectations data. If inflation expectations come in above forecasts, this could intensify concerns about rising prices and prompt the market to reconsider its views on Federal Reserve monetary policy. The report on consumer credit volume will be no less important. The dynamics of this indicator reflect the availability of credit resources for the population and their inclination toward large purchases such as cars or real estate. Growth in consumer credit is generally associated with strengthening economic activity.

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

Buy signal

Scenario No. 1: Today, I plan to buy the pound when the entry point around 1.3586 is reached (green line on the chart), with a growth target at the 1.3621 level (the thicker green line on the chart). Around 1.3621, I will exit long positions and open sell positions in the opposite direction (aiming for a 30–35-point move in the opposite direction from that level). Pound growth today can be expected after weak U.S. data.Important: Before buying, make sure the MACD indicator is above the zero line and is just starting to rise from it.

Scenario No. 2: I also plan to buy the pound today in the event of two consecutive tests of the 1.3558 level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal upward. Growth toward the opposite levels of 1.3586 and 1.3621 can be expected.

Sell signal

Scenario No. 1: I plan to sell the pound today after an update (break) of the 1.3558 level (red line on the chart), which would lead to a rapid decline in the pair. The key target for sellers will be the 1.3511 level, where I will exit short positions and also immediately open buy positions in the opposite direction (aiming for a 20–25-point move in the opposite direction from that level). Pressure on the pound will return today in the event of strong data.Important: Before selling, make sure the MACD indicator is below the zero line and is just starting to fall from it.

Scenario No. 2: I also plan to sell the pound today in the case of two consecutive tests of the 1.3586 level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal downward. A decline toward the opposite levels of 1.3558 and 1.3511 can be expected.

What's on the chart

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

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

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