The price test at 1.3526 occurred when the MACD indicator had moved well above the zero mark, limiting the pair's upward potential. For this reason, I did not buy the pound. The second test of 1.3526 occurred while MACD was in the overbought area, leading to the implementation of Sell Scenario #2 for the pound. As a result, the pair fell by 40 pips.
The review of the July inflation report explained why the initial dollar decline did not turn into a large sell-off. Annual inflation in the U.S. slowed to 3.4% from 3.5%, and core inflation fell to 2.5% from 2.6%, momentarily weakening the U.S. dollar. However, the monthly figures, which the market values no less than the annual ones, matched forecasts exactly, which kept the situation under control. The overall Consumer Price Index added 0.1% after a 0.4% decline in June, while the core rose by 0.2%, exactly in line with expectations. The absence of deviation from the forecast did not give the market a reason for sharp moves and, at the same time, eased some tension after the Federal Reserve's July meeting, where the central bank reluctantly leaned toward a pause. As a result, the dollar quickly stabilized.
Today the British currency enters the day with a focus on an important block of reports, including UK GDP, industrial production, manufacturing output, and the goods trade balance. The GDP report is key here, since it directly shows how confidently the economy is growing and, through expectations regarding Bank of England policy, determines the pound's direction. Industrial data will reflect the state of the real sector, and the trade balance will show how exports and imports of goods compare. For the market, the most important thing will be the deviation of actual figures from the forecast, because that is what reshapes rate expectations. Strong economic growth and a revival in industry will strengthen arguments for resilience and bolster the British currency. At the same time, weak data will deprive it of backing and confirm the market's cautious stance.
As for the intraday strategy, I will rely mainly on implementing Scenarios #1 and #2.
Scenario #1: I plan to buy the pound today when the entry point around 1.3497 (green line on the chart) is reached, targeting a rise to 1.3518 (the thicker green line on the chart). Around 1.3518, I plan to exit long positions and open short positions in the opposite direction (expecting a movement of 30–35 pips in the opposite direction from the level). You can count on pound growth today only if the data is good. Important! Before buying, make sure the MACD indicator is above the zero mark and is just starting to rise from it.
Scenario #2: I also plan to buy the pound today in case of two consecutive tests of the price at 1.3484, with the MACD indicator in the oversold area. This will limit the pair's downward potential and lead to an upward market reversal. A rise toward the opposing levels of 1.3497 and 1.3518 can be expected.
Sell ScenariosScenario #1: I plan to sell the pound today after the level 1.3484 is broken (red line on the chart), which will lead to a rapid decline of the pair. The key target for sellers will be 1.3461, where I plan to exit shorts and also immediately open longs in the opposite direction (expecting a movement of 20–25 pips in the opposite direction from the level). Only bad news will put pressure back on the pound. Important! Before selling, make sure the MACD indicator is below the zero mark and is just starting to decline from it.
Scenario #2: I also plan to sell the pound today in the event of two consecutive tests of the price at 1.3497, at the moment when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a downward market reversal. A decline to the opposing levels 1.3484 and 1.3461 can be expected.
Important: Beginner forex traders need to make entry decisions very cautiously. Before key fundamental reports are released, it is best to stay out of the market to avoid sharp price 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 practice money management and trade large volumes.
And remember, successful trading requires a clear trading plan, as outlined above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.