The price test at 1.2664 occurred when the MACD had just begun to move downward from the zero mark, confirming the optimal entry point for selling the British pound. Consequently, the pair declined toward the target level of 1.2636.
Stronger-than-expected U.S. economic data, which indicated rising inflation, along with Trump's comments on trade tariffs, pressured the British pound while strengthening the U.S. dollar. The market responded immediately, pricing in the likelihood of a more aggressive trade policy from the White House. Investors, concerned about potential rate cuts by the Bank of England, adjusted their portfolios by shifting away from risk assets and toward the safe-haven dollar.
Additionally, Trump is intensifying market anxiety by threatening new trade barriers, raising concerns about a global economic slowdown and increasing demand for the dollar as a safe-haven asset. The risk of escalating trade wars is making investors cautious, leading them to avoid assets sensitive to international trade.
No UK economic data is scheduled for release today, so a strong pound recovery in the first half of the day is unlikely. It is better to trade in line with the existing downward trend, which may intensify towards the end of the month.
I will rely primarily on Scenario #1 and Scenario #2 for today's intraday strategy.
Scenario #1: Buying the pound at 1.2592 (green line on the chart) with a target of 1.2621 (thicker green line on the chart). At 1.2621, I plan to exit the trade and sell in the opposite direction, expecting a 30-35 pip retracement. Pound strength will likely be limited to a corrective rebound. Before buying, ensure the MACD indicator is above zero and just starting to rise.
Scenario #2: Another buying opportunity arises if the price tests 1.2578 twice while the MACD is in oversold territory. This would limit the pair's downside potential and trigger a reversal to the upside. A rise to the opposite levels of 1.2592 and 1.2621 can be expected.
Sell SignalScenario #1: Selling the pound after breaking below 1.2578 (the red line on the chart) could lead to a quick decline. The key target for sellers is 1.2552, where I plan to exit and immediately buy in the opposite direction, expecting a 20-25 pip reversal. It's best to sell the pound at higher levels. Before selling, ensure the MACD indicator is below zero and beginning to decline.
Scenario #2: Selling is planned if the price tests 1.2592 twice while the MACD is overbought territory. This would limit the pair's upside potential and lead to a downward reversal. A decline to the opposite level of 1.2578 and 1.2552 can be expected.