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Buy the GBP/USD pair and set a take-profit at 1.2800. Add a stop-los at 1.2550. Timeline: 1-2 days.
Set a sell-stop at 1.2600 and a take-profit at 1.2500. Add a stop-loss at 1.2700.
The GBP/USD exchange rate continued its recovery this week as the UK hosted its Global Investment Summit. It also rose after a hawkish statement by the head of the Bank of England (BoE). It jumped to a high of 1.2645 on Monday, the highest point since September 1st rates to remain high
The GBP/USD pair's bullish momentum continued after Andrew Bailey reiterated that the BoE will maintain higher interest rates for longer. He pushed back against hopes that the bank will start cutting rates in 2024.
Most analysts have been expecting that the bank will deliver two rate cuts in 2024 now that inflation is falling. The most recent data showed that the country's inflation dropped to 4.7% in October, its biggest dip in years.
There is a likelihood that inflation will continue moving downwards now that oil prices have dropped. Brent slipped to $80 while West Texas Intermediate (WTI) slipped to $75. Petrol prices in the UK have also fallen.
The GBP/USD pair also retreated as the UK held the Global Investment Summit, where it pitched itself as the best investment destination in Europe. In his speech, Rishi Sunak touted lower interest rates and over 29 billion pounds investment to lure businesses.
Global companies have shunned the UK in the past few years because of the impact of Brexit. While the UK has trading relations with European Union, there are still some tariff and non-tariff barriers.
The next important GBP/USD news will come from the United States. First, the Conference Board will release the latest consumer confidence data. Economists polled by Reuters expect the data to show that confidence dropped slightly in November.
The US will also publish the latest house price index (HPI) data while Fed officials like Christopher Waller and Austan Goolsbee will talk/USD technical analysis
The GBP/USD pair continued its uptrend on Tuesday after the hawkish statement by Andrew Bailey. On the 4H chart, it has just risen above the 50% Fibonacci Retracement level. Also, the pair has moved above the 50-period moving average.
The Relative Strength Index (RSI) has formed an ascending channel while the Average Directional Index (ADX) is approaching 40. A higher ADX figure is usually a sign of a trend strength.
Therefore, the outlook for the pair is still bullish, with the next point to watch being at 1.2800.
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