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The price test at 1.3458 occurred when the MACD indicator had moved well below the zero line, limiting the pair's downside potential.
Yesterday the Federal Reserve unanimously raised the policy rate by 25 basis points, 12–0. Fed Chair Kevin Warsh cited three reasons for the decision: an improving labor market and economy, disinflation progressing too slowly, and a changed geopolitical backdrop, adding that financial conditions are difficult to call truly tight. For the pound, this outcome looks especially painful given yesterday's hit from UK inflation data, which undermined BoE-hike expectations. GBP/USD now sits between two negative forces: weakening prospects for its own tightening and a sharply increased Fed resolve. However, the day's key event will be the Bank of England's rate decision and its accompanying policy statement. Most economists do not expect a rate change and price the cash rate to be left at 3.75%, but the intrigue lies in the tone the regulator uses to assess yesterday's CPI jump to 3.1% — a figure that materially exceeded the BoE's own forecasts.
If the BoE signals a firmer stance for the future, I believe that would give sterling a reason to buy and produce a modest correction after yesterday's large sell-off. That scenario is logical: inflation has accelerated for a second month, and it will be hard for the central bank to ignore that trend in its official comments, even if it leaves the rate unchanged today. Conversely, a neutral tone would, in my view, leave GBP/USD without a meaningful driver.
For intraday strategy, I will rely mainly on Scenarios No. 1 and No. 2.
Scenario No. 1: I plan to buy the pound today at an entry around 1.3384 (green line on the chart), targeting a rise to 1.3407 (thicker green line on the chart). At 1.3407, I intend to exit long positions and open short positions in the opposite direction (expecting a 30–35 pip retracement from that level). Expect sterling strength today only after a truly hawkish BoE tone. Important: before buying, ensure the MACD is above zero and only beginning to rise.
Scenario No. 2: I also plan to buy the pound today in case of two consecutive tests of 1.3370 while the MACD is in oversold territory. That would limit the pair's downside and lead to an upward reversal. One can expect moves to the opposite levels 1.3384 and 1.3407.
Scenario No. 1: I plan to sell the pound today after a break below 1.3370 (red line on the chart), which would lead to a quick decline in the pair. The sellers' key target will be 1.3350, where I plan to exit shorts and immediately open longs in the opposite direction (expecting a 20–25 pip reversal from that level). Bad news will restore pressure on the pound. Important: before selling, ensure the MACD is below zero and only beginning to fall.
Scenario No. 2: I also plan to sell the pound today in case of two consecutive tests of 1.3384 while the MACD is in overbought territory. This would limit the pair's upside potential and trigger a reversal down. Expect a decline to the opposite levels of 1.3370 and 1.3350.
Important: Beginner traders in the Forex market need to be very cautious when making entry decisions. It is best to stay out of the market ahead of significant fundamental reports to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without stop orders, you can quickly lose your entire deposit, especially if you do not employ money management practices and trade large volumes.
Also, remember that successful trading requires a clear trading plan, similar to the one provided above. Making spontaneous trading decisions based on current market conditions is inherently a losing strategy for intraday traders.
*Analiza tržišta koja se ovde nalazi namenjena je boljem razumevanju tržišta i ne pruža instrukcije za vršenje trgovanja.
Uz InstaSpot-ove analitičke preglede uvek ćete biti u toku sa tržišnim trendovima! Klijentima InstaSpot-a su dostupni mnogobrojni besplatni servisi za uspešno trgovanje.
