FX.co ★ Analysis and trading tips for GBP/USD on February 3

Analysis of transactions in the GBP / USD pair

A signal to buy emerged after GBP/USD hit 1.3527. Coincidentally, the MACD line was above zero, so the pair increased by 35 pips. Meanwhile, selling at 1.3562 did not lead to the expected correction, so saw traders slight losses. No other signal appeared for the rest of the day.

GBP/USD did not fall even though retail sales in the UK did not exceed expectations. Instead, a rally was seen in the afternoon because weak employment report from the ADP lowered demand for dollar.

Most likely, this bullish move will continue as the Bank of England may take more aggressive actions to curb inflation. More specifically, a further increase in interest rates will prompt more demand for the pound. But weak PMI data could limit growth in the market, as will strong reports on the US economy. If business activity in the US exceeds expectations, demand for dollar will return, which will lead to a fall in GBP/USD.

For long positions:

Buy pound when the quote reaches 1.3564 (green line on the chart) and take profit at the price of 1.3613 (thicker green line on the chart). A rally will occur if the Bank of England announces further increase in interest rates. But before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.3535, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.3564 and 1.3613.

For short positions:

Sell pound when the quote reaches 1.3535 (red line on the chart) and take profit at the price of 1.3498. A decline will occur if Andrew Bailey says the Bank of England will stop raising interest rates. But before selling, make sure that the MACD line is below zero, or is starting to move down from it. Pound can also be sold at 1.3564, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.3535 and 1.3498.

What's on the chart:

The thin green line is the key level at which you can place long positions in the GBP/USD pair.

The thick green line is the target price, since the quote is unlikely to move above this level.

The thin red line is the level at which you can place short positions in the GBP/USD pair.

The thick red line is the target price, since the quote is unlikely to move below this level.

MACD line - when entering the market, it is important to be guided by the overbought and oversold zones.

Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.