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

Analysis and trading tips for GBP/USD on February 3

Analysis of transactions and tips for trading GBP/USD

Pound tested 1.2364 when the MACD line was just starting to move below zero, which was a pretty good signal to sell. This resulted in a decrease of about 30 pips. Meanwhile, buying on a rebound from 1.2329 led to losses because the price did not go up. No other signals appeared for the rest of the day.

Analysis and trading tips for GBP/USD on February 3

The outcome of the Bank of England meeting yesterday was unexpected because after the bank raised interest rates by 0.5%, they announced that they are no longer going to proceed with an aggressive policy. This resulted in a sharp decline in pound.

Most likely, this momentum will continue today as ahead are PMI data in the UK, which could put further pressure in demand, especially if it indicates a decline in the figures. Then, a speech from Bank of England MPC member Huw Pill and talks of a softer approach to future policy will lead to an even bigger drop in the currency. However, this could change in the afternoon with the release of the much more important US non-farm payrolls report for January. A sharp slowdown in new job growth could lead to a fall in dollar demand and consequently, a rise in pound. Service and composite PMI data in the US will be of little interest.

For long positions:

Buy pound when the quote reaches 1.2240 (green line on the chart) and take profit at the price of 1.2295 (thicker green line on the chart). Growth will be possible if the UK publishes very strong PMI data. However, make sure that when buying, the MACD line is above zero or is starting to rise from it. Pound can be bought at 1.2210, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2240 and 1.2295.

For short positions:

Sell pound when the quote reaches 1.2210 (red line on the chart) and take profit at the price of 1.2161. Pressure will return if the UK releases weak economic statistics. The breakdown of yesterday's low could also prompt a price decrease. However, when selling, make sure that the MACD line is below zero or is starting to move down from it. Pound can also be sold at 1.2240, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2210 and 1.2161.

Analysis and trading tips for GBP/USD on February 3

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 decision based on the current market situation is an inherently losing strategy for an intraday trader.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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