Analysis of transactions in the GBP / USD pair

Although yesterday was not the most profitable for GBP/USD, traders managed to avoid huge losses, thanks to the rebound that occurred in the market in the afternoon. It brought about 20 pips of profit, offsetting the minus seen during the deals around 1.3065 and 1.3046.

Led by Jerome Powell, Fed officials voted 8-1 to raise the key rate to 0.25% - 0.5%. This is the first increase since 2018, leading to a brief rise in dollar demand. But since traders already expected this change, risk appetite returned shortly, turning up GBP/USD.

Another big day awaits the markets today as the Bank of England will release its own decision on interest rates. Many expect to see an increase to 0.75%, which, if really happens, will prompt another rally in pound.

In the afternoon, the US will publish reports on building permits, home foundation and industrial output. Strong performance across the board will confirm the robust state of the economy, while weaker data will put pressure on the dollar. The thing that would increase risk appetite is news related to the negotiations in Ukraine

For long positions:

Buy pound when the quote reaches 1.3165 (green line on the chart) and take profit at the price of 1.3220 (thicker green line on the chart). A rally may occur today after the release of results of the Bank of England meeting. 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 1.3125, however, the MACD line should be in the oversold area as only by that will the market reverse to 1.3165 and 1.3220.

For short positions:

Sell pound when the quote reaches 1.3125 (red line on the chart) and take profit at the price of 1.3062. Pressure will return if the Bank of England takes a very soft approach on monetary policy, however, that is very unlikely because inflationary pressure is high at the moment.

In any case, 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 1.3165, however, the MACD line should be in the overbought area, as only by that will the market reverse to 1.3125 and 1.3062.

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.