(MENAFN- Daily Forex) Bearish view
Sell the GBP/USD pair and set a take-profit at 1.2656. Add a stop-loss at 1.2750. Timeline:1-2 days.
Bullish view
Set a buy-stp at 1.2722 and a take-profit at 1.2800. Add a stop-loss at 1.2650.
The GBP/USD continued to stabilize after the mixed economic numbers from the United States and the upcoming
bank of England (BoE) interest rate decision. It was trading at 1.2700 on Wednesday morning, a few points above last Friday's low of 1.2655.
BoE decision and UK inflation data
The US published mixed economic numbers on Tuesday. According to the statistics agency, the headline retail sales rose by 0.1% in May, missing the analysts estimates of 0.3%. The core retail sales dropped by 0.1%, also lower than the expected 0.2%.
These numbers show that consumer spending is still weak because of the stubbornly high inflation. Data released last week revealed that the headline and core consumer price index (CPI) dropped slightly to 3.3% and 3.4% in May.
On the positive side, the country's industrial production rose by 0.39% in May after falling by 0.68% in April. The manufacturing production rose by 0.9%, which was a bit higher than the expected 0.3%.
The data came a few days after the Federal Reserve left interest rates unchanged and hinted that it will deliver just one cut this year. In statements this week, Fed's Patrick Harker and Adriana Kugler said that the bank will continue focusing on incoming data to determine whether it will start cutting rates.
The GBP/USD pair will next react to the upcoming UK inflation data and Bank of England decision. These numbers are expected to show that the country's inflation continued moving downwards in May. The headline CPI is expected to drop from 2.3% in April to 2.0% in May.
The core CPI is expected to drop from from 3.9% to 3.5%. The country's inflation report will come as the Bank of England starts its monetary policy meeting. If the CPI numbers miss estimates, they will point to a potential dovish decision/USD technical analysis
The GBP/USD pair peaked at 1.2860 earlier this month and then retreated to a low of 1.2656 after the Fed decision last week. On the 4H chart, the pair is approaching the Woodie pivot point at 1.2722.
It is also approaching the 23.6% Fibonacci Retracement point. It has also dropped below the 50-period Exponential Moving Average (EMA) and is between the first and second support lines of the Andrew's pitchfork tool.
Therefore, the pair will likely resume the downward trend as sellers target the next support at 1.2656, its lowest point on Friday.
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