Trade review for Wednesday:

1H chart of the GBP/USD pair

The GBP/USD pair traded in convulsions on Wednesday. During the day, traders could not decide in which direction to trade the pound, and the news flow kept changing its character. Early in the morning, the UK inflation report for December was published, which should have prompted a strengthening of the pound. The consumer price index accelerated, beating forecasts, and the probability of a Bank of England rate cut at upcoming meetings fell. Thus, the backdrop for the pound in the first half of the day was favorable, yet we saw a decline. In the second half of the day, the "songs and dances" began. Donald Trump arrived late to the Davos forum, a meeting with the German chancellor and other European leaders had to be cancelled, but following a meeting with NATO Secretary-General Mark Rutte, Trump announced an agreement on Greenland and lifted the tariffs for the UK and EU countries that were due to take effect on February 1.

5M chart of the GBP/USD pair

How to trade on Thursday:

On the hourly timeframe, the GBP/USD pair has turned north, so in the coming weeks, one can expect further gains for the pound. There are no global reasons for a medium-term strengthening of the dollar, so in 2026, we expect a resumption of the 2025 global uptrend, which could drive the pair toward 1.4000 in the next couple of months. Donald Trump's policy still does not presuppose dollar strength.

On Thursday, novice traders can consider short positions if the pair bounces from the 1.3437–1.3446 area with a target of 1.3403–1.3407. A close above the 1.3437–1.3446 area would justify opening new long positions with a target of 1.3484–1.3489.

On the 5-minute timeframe, you can trade the levels 1.3203–1.3212, 1.3259–1.3267, 1.3319–1.3331, 1.3365, 1.3403–1.3407, 1.3437–1.3446, 1.3484–1.3489, 1.3529–1.3543, 1.3574–1.3590, 1.3643–1.3652, 1.3682. No important events are scheduled in the UK on Thursday, while during the US session, traders will learn the final extent of US economic growth in Q3. Market volatility may return to normal today, and the normal level in recent months has been quite low.

Main rules of the trading system:

1. Signal strength is judged by the time required to form the signal (rebound or breakout). The less time required, the stronger the signal.
2. If two or more trades were opened on false signals near a level, then all subsequent signals from that level should be ignored.
3. In a flat, any pair can generate many false signals or none at all. In any case, at the first signs of a flat, it is better to stop trading.
4. Trades are opened between the start of the European session and the middle of the American session; after that, all trades must be closed manually.
5. On the hourly timeframe, MACD-based signals should be traded only when there is good volatility and a trend confirmed by a trendline or trend channel.
6. If two levels are located too close to each other (5–20 pips), they should be considered a support or resistance area.
7. After the price moves 20 pips in the correct direction, set the stop loss to breakeven.

What is shown on the charts:

Support and resistance price levels — levels that serve as targets when opening buys or sells. Take Profit can be placed near them.

Red lines — channels or trendlines that reflect the current tendency and show which direction is preferable to trade now.

MACD indicator (14,22,3) — histogram and signal line — an auxiliary indicator that can also be used as a source of signals.

Important speeches and reports (always listed in the news calendar) can strongly affect a currency pair's movement. Therefore, during their release, trading should be done with maximum caution, or positions should be closed, to avoid a sharp price reversal against the preceding move.

Beginner forex traders should remember that not every trade can be profitable. Developing a clear strategy and effective money management are the keys to long-term trading success.