The GBP/USD pair traded for most of the day without a definite, clear direction on the 30-minute timeframe on Wednesday. However, that all changed in the afternoon when the US inflation report for April was released. We have already said that this report turned out to be significantly worse than forecasts, which predicted a 3.6% increase in prices compared to last April. In reality, prices rose by 4.2% y/y. However, it seems that the markets did not immediately understand what to do with the dollar in connection with this information, and when they did, they made a mistake in their conclusions. Or they interpreted the report in their own way. We remind novice traders that rising inflation is a negative moment for a currency. Thus, today it would be much more logical to see the dollar falling and, accordingly, the growth of the pound/dollar pair. However, the pound has been growing for seven days until today, so it was trivial to continue its growth. In general, by the end of today, the dollar rose in price, and novice traders could be convinced that the markets do not always react "correctly" to a particular report. The upward trend line is maintained for the pound/dollar pair on the 30-minute timeframe, so it is recommended to consider only buy signals from the MACD indicator. Today, only one such signal was generated, but much below the zero level, so it should not have been processed.
The GBP/USD pair traded almost identically to the EUR/USD pair on the 5-minute timeframe. In total, two signals were formed during the day, both near the level of 1.4081, but both should not be worked out. The first signal was formed exactly when the US inflation report was published, afterwards the "swing" began, the second was formed when the whole movement ended, at the end of the day. Not a single signal was generated during the European trading session. The 1.4149 level was not on the chart today, which is today's high, and can only take part in trading tomorrow. By the way, take note that the inflation report was not the only report of the day. In the UK, data on GDP was published today, which showed that in the first quarter the British economy lost 1.5%, but accelerated recovery in March. Industrial production data and several other relatively important reports were also published. All of them came out in the morning, at the beginning of the European session, but there was practically no reaction to them. One has only to compare the movements of the pair after the inflation report and the movements of the pair after the reports from the UK. Also scheduled for today was Andrew Bailey's speech, which began an hour and a half later after inflation in the United States. Therefore, it is now difficult to say why the pair continued to decline over the past few hours.
Trading tips for Thursday:
At this time, an upward trend is maintained on the 30-minute timeframe, supported by an uptrend line. However, at this time, the pair has begun to correct, so you need to wait for buy signals from the MACD. The indicator is now below the zero level, so now you need to wait until it rises back to this level. On the 5 minute timeframe, the important levels are 1.4008, 1.4081 and 1.4149. The price can bounce off them or overcome them. As before, we set Take Profit at a distance of 40-50 points. You can also use all the nearest levels as targets, but then you need to fix the profit, taking into account the strength of the movement, so as not to close the deal too early. When passing 20 points in the right direction, we recommend setting Stop Loss to breakeven. Andrew Bailey is scheduled to perform again in the UK on Thursday, and several side reports in America. We recommend that beginners pay attention to these events.
