(MENAFN- Daily Forex) Advertisement looking for more market signals? get them here! Bearish view Sell the gbp/usd pair and set a take-profit at 1.1900. Add a stop-loss at 1.2100. Timeline: 1-2 days.
Bullish view Set a buy-stop at 1.2075 and a take-profit at 1.2150. Add a stop-loss at 1.2000.
The GBP/USD price tilted upwards after the latest statement by Jerome Powell, the Fed chairman. It also drifted higher after a series of mixed economic numbers from the US. The pound-to-dollar exchange rate was trading at 1.2051, slightly higher than this week's low of 1.1900. It had its second straight month of gains as it rose by over 7% from its lowest point.US PCE data ahead
Jerome Powell delivered his first statement since the US published encouraging inflation numbers in October. The data revealed that the country's inflation dropped to 7.7% in September as gas prices stabilized.
Most Fed officials have delivered their statements since then. In them, they reiterated that the bank will likely start reducing the size of rate hikes in the coming meeting in December.
Therefore, most investors were waiting for Powell's first public statement. In it, he confirmed that the Fed will start slowing down the size of rate hikes in December. After hiking rates by 75 basis points in the past four meetings, he hinted that the bank will hike by 0.50% in its meeting in December.
He added that doing so will let the bank assess the impact of rate hikes on the economy. It will also slow the pace in a bid to observe inflation trends.
The GBP/USD will react mildly to the upcoming PCE data from the US. This is important data since it is the Fed's most favorite inflation gauge. Economists expect the data to reveal that core PCE dropped from 5.1% in September to 5.0% in October. They expect that the broad PCE declined from 6.2% to 6.0%.
These numbers will have a mild impact on the pair since the data will not change the Fed's plans on December rate hikes.GBP/USD forecast
The Renko chart shows that the GBP/USD pair has been in a bullish trend since the end of September. This recovery happened as the US dollar ended its remarkable rally. It has formed an ascending channel shown in orange. The pair remained above the 25-day and 50-day moving averages while the Stochastic Oscillator tilted downwards.
Therefore, the pair will likely resume the downward trend as sellers target the lower side of the ascending channel at 1.1600. A move above the upper side of the ascending channel will signal that buyers have prevailed.
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