(MENAFN- Daily Forex) Bearish view
Sell the GBP/USD pair and set a take-profit at 1.2660. Add a stop-loss at 1.2760. Timeline: 1-2 days.
Bullish view
Set a buy-stop at 1.2720 and a take-profit at 1.2800. Add a stop-loss at 1.2680.
The GBP/USD
exchange rate wavered after the UK published encouraging inflation data ahead of the important
bank of England (BoE) decision. The pair was trading at 1.2715, a few points above this week's low of 1.2657.
Bank of England's decision ahead
The Bank of England will conclude its two-day meeting on Thursday and deliver its closely watched interest rate decision.
Economists expect that the BoE will leave interest rates unchanged at 5.25% as it has done in all meetings this year.
Therefore, the key driver for the GBP/USD pair will be the bank's statement on when it will start cutting interest rates.
Today's decision will come a day after the Office of National Statistics (ONS) published encouraging inflation data. These numbers revealed that the headline Consumer Price Index (CPI) rose by 0.3% in May, missing the expected increase of 0.4%.
The CPI dropped from 2.3% to 2.0% on a YoY basis, reaching the central bank's target. Most importantly, the core CPI, which excludes the volatile food and energy prices also continued dropping.
The core CPI fell from 0.9% to 0.5% on a month-on-month basis and from 3.9% to 3.5% on an annualized basis. While this figure remained above the BoE target, it is moving in the right direction.
Therefore, analysts expect that the BoE will start cutting interest rates after the country's election in July.
The other catalyst for the GBP/USD pair will be the upcoming crucial economic numbers from the United States. Economists expect the data to show that the country's housing starts rose from 1.36 million in April to 1.37 million in May.
The building permit numbers are expected to improve from 1.44 million in April to 1.45 million in May. The other data to watch will be the upcoming Philadelphia Fed manufacturing index.
Top Forex Brokers
1 Get Started 74% of retail CFD accounts lose money
GBP/USD technical analysis
The GBP/USD pair has rebounded in the past few days as traders wait for the BoE decision. It has rebounded from last Friday's low of 1.2657 to 1.2715.
On the four-hour chart, the pair has remained below the 23.6% Fibonacci Retracement point. It is also consolidating at the 50-period and 25-period Exponential Moving Averages (EMA).
Most notably, the pair has formed a rising wedge chart pattern, a popular bearish sign. Therefore, the GBP/USD exchange rate will likely retreat and retest the key support at 1.2657, its lowest point on Friday last week.
Ready to trade our free daily Forex trading signals? We've shortlisted the best UK forex brokers in the industry for you.
MENAFN20062024000131011023ID1108354770
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.