Trade Analysis and Tips for Trading the British Pound

The test of the price at 1.3435 coincided with the moment when the MACD indicator was just beginning to move upward from the zero mark, confirming the correct entry point for buying the pound. As a result, the pair rose by 15 pips.

The reaction of the U.S. currency to Friday's Michigan data was contradictory; the exchange rate fluctuated sharply without a clear direction amid the pessimistic figures. The data showed that the University of Michigan consumer sentiment index for May 2026 fell to 44.8 points, significantly below the preliminary estimate of 48.2. Such a rapid deterioration in sentiment served as a warning signal for many traders regarding the U.S. economy confronting serious systemic issues.

Today, the dollar continued to decline following Trump's statements that a peace agreement has largely been agreed upon and is now awaiting finalization between the U.S. and Iran. The key element of the deal is expected to be the return of oil transit through Hormuz, which will inevitably lead to a reassessment of energy prices and a resurgence in demand for risk assets. Given that there are no fundamental reports from the UK in the first half of the day, the lack of drivers means the pair is likely to trade within a sideways channel, responding solely to global risk appetite and any headlines related to the Middle East.

As for the intraday strategy, I will rely more on implementing scenarios No. 1 and No. 2.

Buy Scenarios

• Scenario #1: I plan to buy the pound today upon reaching an entry point around 1.3495 (the green line on the chart), targeting a move to 1.3536 (the thicker green line on the chart). At around 1.3536, I aim to exit the long positions and open short positions immediately on the bounce, anticipating a 30-35-pip move in the opposite direction from the level. Strong pound growth today is only expected after a breakthrough in the peace agreement. Important! Before buying, ensure that the MACD indicator is above the zero mark and just starting to rise from it.
• Scenario #2: I also plan to buy the pound today if the price tests 1.3460 twice in a row while the MACD indicator is in the oversold zone. This will limit the pair's downward potential and lead to an upward market reversal. We can expect growth to the opposing levels of 1.3495 and 1.3536.

Sell Scenarios

• Scenario #1: I plan to sell the pound today after it reaches 1.3460 (the red line on the chart), which will trigger a rapid decline in the pair. The key target for sellers will be the 1.3421 level, where I plan to exit the shorts and buy immediately in the opposite direction, anticipating a 20-25-pip move from that level. Pressure on the pound may return at any moment. Important! Before selling, ensure that the MACD indicator is below the zero mark and just starting to decline from it.
• Scenario #2: I also plan to sell the pound today if the price tests 1.3495 twice in a row while the MACD indicator is in the overbought zone. This will limit the pair's upward potential and lead to a market reversal downward. We can anticipate a decline to the opposing levels of 1.3460 and 1.3421.

What the Chart Indicates:

• Thin Green Line: Entry price for buying the trading instrument;
• Thick Green Line: Estimated price where take profit can be set or profits can be locked in, as further growth above this level is unlikely;
• Thin Red Line: Entry price for selling the trading instrument;
• Thick Red Line: Estimated price where take profit can be set or profits can be locked in, as further decline below this level is unlikely;
• MACD Indicator: When entering the market, it's important to consider the overbought and oversold zones.

Important Note:

Novice Forex traders must be very cautious when making market entry decisions. It is best to stay out of the market before important fundamental reports are released to avoid sharp fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without placing stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

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 inherently a losing strategy for intraday traders.