Trade Analysis and Tips for Trading the British Pound

The test of the 1.3425 level occurred when the MACD indicator had already moved significantly above the zero line, limiting the pair's upward potential. For this reason, no pound purchases were made.

British economic data released during the first half of the day consisted of a single figure. The manufacturing PMI for October came in at 52.8, exactly matching both the forecast and the previous reading. The market generally considers such figures neutral, as they indicate neither an acceleration that could support buying the pound nor a slowdown that might trigger profit-taking. Notably, British manufacturing is performing almost in line with the eurozone, where the index came in at 52.7. This means that the pound has no domestic catalyst to drive its movement today.

When no new British data on inflation, employment, or consumer demand is released, the pound becomes more dependent on external factors, with sentiment surrounding the U.S. dollar becoming the main market driver. The U.S. economic agenda in the second half of the day is likely to determine the direction of GBP/USD. The October ISM Manufacturing PMI is expected to reach 54.7, compared with 54.5 in the previous month. This purchasing managers' survey is considered one of the timeliest indicators of the state of the U.S. manufacturing sector. If the figure exceeds expectations, the market may conclude that inflationary pressures in the United States remain elevated, shifting expectations for the Federal Reserve's interest rate toward a more hawkish outlook. In this case, the pound, lacking domestic catalysts, would come under pressure. U.S. construction spending data for September will provide an additional signal.

As for the intraday strategy, greater emphasis will be placed on the implementation of Scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, the pound can be bought when the entry price reaches the 1.3421 level (the green line on the chart), with a target of 1.3457 (the thicker green line on the chart). Around 1.3457, the long position will be closed and a short position opened in the opposite direction, targeting a 30–35-point move from that level. The pound may rise today if U.S. data is weaker than expected. Important! Before buying, make sure that the MACD indicator is above the zero line and has only just started moving higher from it.

Scenario No. 2: The pound can also be bought today if the price tests the 1.3399 level twice consecutively while the MACD indicator is in the oversold area. This would limit the pair's downward potential and trigger an upward market reversal. A rise toward the opposite levels of 1.3421 and 1.3457 can be expected.

Sell Signal

Scenario No. 1: Today, the pound can be sold after the price breaks below the 1.3399 level (the red line on the chart), which could lead to a rapid decline in the pair. The sellers' key target will be 1.3373, where the short position will be closed and a long position opened immediately in the opposite direction, targeting a 20–25-point move from that level. Strong selling pressure on the pound is likely to return if U.S. economic data is stronger than expected. Important! Before selling, make sure that the MACD indicator is below the zero line and has only just started moving lower from it.

Scenario No. 2: The pound can also be sold today if the price tests the 1.3421 level twice consecutively while the MACD indicator is in the overbought area. This would limit the pair's upward potential and trigger a downward market reversal. A decline toward the opposite levels of 1.3399 and 1.3373 can be expected.

What the Chart Shows

• Thin green line – the entry price at which the trading instrument can be bought.
• Thick green line – the estimated price at which Take Profit orders can be placed or profits can be closed manually, as further gains above this level are unlikely.
• Thin red line – the entry price at which the trading instrument can be sold.
• Thick red line – the estimated price at which Take Profit orders can be placed or profits can be closed manually, as further declines below this level are unlikely.
• MACD indicator. When entering the market, it is important to consider the overbought and oversold areas.

Important. Beginner Forex traders should make market-entry decisions with great caution. Before the release of important fundamental reports, it is generally best to stay out of the market to avoid exposure to sharp exchange-rate fluctuations. If trading during news releases, always place stop-loss orders to minimize potential losses. Without stop-loss orders, the entire trading account can be depleted very quickly, especially when large position sizes are used without proper money management.

It is also important to remember that successful trading requires a clear trading plan, such as the one presented above. Making spontaneous trading decisions based on current market conditions is a fundamentally losing strategy for an intraday trader.