Hello everyone, hope you’re all well!
I’m excited to start journaling my trades for the first time so that I can receive feedback and advice on how to improve. I know there’s always room for growth, and I’d appreciate any insights you may have.
Pair: GBP/USD
Position: Short Sell
US Economy
In my view, the U.S. economy is strong. Inflation is at 2.4%, down slightly from 2.5%, which is just above the Federal Reserve’s 2% target. With inflation on a stable path, I believe the Fed will likely hold rates steady or maintain a hawkish stance without additional rate hikes. Consumer confidence also saw a slight uptick to 70.5, reflecting optimism in the economy. Furthermore, the ISM Services PMI showed solid expansion at 54.9, up from 51.5, while Manufacturing PMI remains below 50, indicating contraction in that sector. Overall, I see the U.S. economy as stable with a strong services sector and a tightening Fed, even as manufacturing lags. Also, Trump winning the election causes strength in the dollar as his policies are seen as being more inflationary than Kamala’s, therefore there is less need for rate cuts.
UK Economy
I view the UK economy as relatively weak. Inflation has dropped to 1.7% from 2.2%, indicating deflation, and with inflation near or below the 2% target, the Bank of England is unlikely to feel pressured to raise rates soon. The money supply increased marginally, from 3.02 million to 3.04 million, which I think is too small a change to meaningfully impact spending or economic activity. Additionally, consumer confidence has slipped, reflecting some pessimism about the UK economy. Services PMI remains in expansion territory at 51.5, though it’s down slightly from 52.3; I see this as a minor dip that doesn’t suggest significant weakness in services. However, the manufacturing PMI has dropped below 50 to 49, down from 51.5, signalling contraction and a slowdown in manufacturing.
USD Headlines
. “Fed’s Kashkari: Fed wants to have confidence inflation will go all the way back to 2%” - The Fed are cautious about cutting interest rates which may cause USD strength to last longer as investors expect higher us yields.
. “Moody’s says ‘the risks to US fiscal strength have increased’” - Moody’s is worried about how the U.S. is handling its money and debt. They think there could be problems with the country’s finances. However, despite this sounding bad, a lot of people have faith that the U.S. dollar will be strong because they think the U.S. economy is stable.
GBP Headlines
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Headline - “ECB’s Holzmann sees no reason not to cut rates in December” - The European Central Bank could lower interest rates in December, which could mean slower economic growth in Europe. This could make the British pound weaker compared to stronger currencies like the U.S. dollar.
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Headline - “EUR/USD forecast: Trump policies likely to be watered down, USD won’t sustain its strength” - This suggests the U.S. dollar might not stay as strong because of changes in U.S. policies. Since the British pound often moves in a similar way to the euro, any problems with the euro could make the pound weaker too.
Technical analysis
A bearish engulfing candle formed on the daily timeframe and I took a short trade trade. Also majority of traders who are trading GBP/USD are long so I’m taking a short to go against the majority because 90% of traders fail. 76% of traders are long and 24% short on GBP/USD.
If anyone can give tips on how I can improve my trading and my journaling that will be much appreciated as I am still learning.
Have a great day everyone.
