Trade review and tips for trading the British pound

The price test at 1.3422 coincided with the MACD indicator just beginning to move above the zero line, confirming the correct entry point to buy the pound. As a result, the pair rose by 30 pips.

However, in the second half of the day, the dollar strengthened after US President Donald Trump said he would not impose tariffs on EU countries from February 1. This became possible after a productive meeting with NATO Secretary-General Mark Rutte about Greenland. The market reacted quickly, seeing this as a sign of a softening of US trade policy. Investors were encouraged, believing the threat of a transatlantic trade war hanging over the global economy had receded.

The market is awaiting further details of the Greenland agreement, but the first step has already been taken. The deal is expected to include expanding the US presence on the island, investing in infrastructure, and pursuing joint mineral extraction projects. However, not all experts share the optimism. Some warn the truce may be temporary. The US and EU still disagree on many issues, so despite the positive signals, continued negotiations and search for compromises remain necessary.

This morning, CBI retail sales and net public sector borrowing data will be released. CBI retail sales serve as a leading indicator of consumer spending, which in turn plays an important role in shaping UK GDP. An increase in retail sales indicates stronger consumer confidence and a greater willingness to spend, which is positive for the pound. Conversely, a decline in sales may signal a slowdown in economic growth and put pressure on the British currency. Net public sector borrowing is also a significant indicator of the country's fiscal position. Rising borrowing may signal a growing budget deficit and could require government measures to cut spending or raise revenues. Over the long term, this can undermine investor confidence and lead to a weaker pound.

For the intraday strategy, I will mainly rely on Scenarios No. 1 and No. 2.

Buy scenarios

Scenario No.1: I plan to buy the pound today at an entry point around 1.3439 (green line on the chart), with a target to rise to 1.3470 (thicker green line on the chart). Around 1.3470, I intend to exit long positions and open shorts on the reversal (expecting a 30–35-pip move to the downside from that level). Expect pound gains today only after strong 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 if two consecutive tests of 1.3421 occur while the MACD is in the oversold area. This will limit the pair's downside potential and lead to an upward reversal. One can expect a rise to the opposite levels 1.3439 and 1.3470.

Sell scenarios

Scenario No.1: I plan to sell the pound today after a break below 1.3421 (red line on the chart), which should lead to a rapid decline. The key target for sellers will be 1.3397, where I plan to exit shorts and immediately open longs on the rebound (expecting a 20–25-pip move back from that level). Pound sellers may assert themselves after weak 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 if two consecutive tests of 1.3439 occur while the MACD is in the overbought area. This will limit upside potential and trigger a reversal downward. One can expect a decline to the opposite levels 1.3421 and 1.3397.

What is on the chart

• Thin green line — entry price at which you can buy the instrument
• Thick green line — suggested Take Profit price or level at which to manually lock in profit, since further rise above this level is unlikely.
• Thin red line — entry price at which you can sell the instrument
• Thick red line — suggested Take Profit price or level at which to manually lock in profit, since further decline below this level is unlikely.
• MACD indicator — when entering the market, it is important to follow the overbought and oversold zones
• Important notes: Beginner forex traders must be very cautious when deciding to enter the market. It is best to be out of the market before major fundamental reports are released to avoid being caught in sharp price swings. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can lose your entire deposit quickly, especially if you do not use money management and trade large volumes.
• Remember that successful trading requires a clear trading plan like the one presented above. Spontaneous trading decisions based on current market noise are a losing strategy for the intraday trader.