(MENAFN- Daily Forex) Advertisement ready to make your money work for you? start trading now Bearish view Sell the gbp/usd pair and set a take-profit at 1.1645. Add a stop-loss at 1.1950. Timeline: 1-2 days.
Bullish view Set a buy-stop at 1.1920 and a take-profit at 1.200. Add a stop-loss at 1.1825.
The GBP/USD price moved sideways on Wednesday morning as traders waited for the Federal Reserve minutes. It also reacted mildly to the latest OECD report on the state of the British economy. The pair was trading at 1.1870, which was slightly below the year-to-date high of 1.2027.FOMC minutes ahead
The OECD published its closely watched economic outlook on Tuesday. The report warned that the British economy will be the worst performing in the G20 after Russia. It expects thay the economy will contract by 0.4% in 2023 and then rise by just 0.2% in 2024.
The statement also warned about the government's stimulus package on energy. Rishi Sunak's administration has capped the average household energy bill to £2,500 until April. The OECD believes that the stimulus will lead to higher interest rates and government debt.
The statement came on the same day that the UK published the latest public borrowing data. Net borrowing increased to £13.5 billion in October, the fourth biggest October borrowing on record. The number was nonetheless lower than the median estimate of £22 billion. The government spent £76.5 billion in October and collected £51.7 billion.
Therefore, the Bank of England (BoE) is at a difficult place since inflation is soaring. It rose to 11.1% in October, the highest point in over 40 years. The risk is that more rate hikes when the UK is going through stagflation will make the situation worse.
The next key data to watch will be the preliminary manufacturing and services PMI numbers from the UK and the US. In the UK, economists expect the data to show that the manufacturing PMI dropped to 45.7 in November while the services figure fell to 48. In the US, analysts expect that manufacturing PMI dropped to 50.
The GBP/USD price will also react to the latest American durable goods orders, new home sales numbers, and the FOMC minutes.GBP/USD forecast
The GBP/USD price has been in a consolidation phase in the past few days. In this period, it has remained between the important resistance level at 1.2027 and 1.1646. The two were the highest points on October 26 and November 15. It is also at the standard pivot point and is being supported by the 25-day and 50-day moving averages .
At the same time, the MACD has formed a bearish divergence pattern. Therefore, the pair will likely retreat ahead of the FOMC minutes. If this happens, the next key support level to watch will be at 1.1645.
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