(MENAFN- Daily Forex) Bullish view
Buy the GBP/USD pair and set a take-profit at 1.2825. Add a stop-loss at 1.2665. Timeline: 1-2 days.
Bearish view
Set a sell-stop at 1.2745 and a take-profit at 1.2665. Add a stop-loss at 1.2825.
The GBP/USD
exchange rate rose for two consecutive days as traders waited for the key US and UK inflation and retail sales data. It rose to a high of 1.2760 on Monday, higher than last week's low of 2665 and US inflation data
The GBP/USD exchange rate continued rising ahead of key economic data from the two countries.
In the US, the Bureau of Labor Statistics (BLS) will release the latest Producer Price Index (PPI) data on Tuesday followed by the Consumer Price Index (CPI) report on Wednesday.
These numbers are expected to show that inflation remained steady last month, with the headline CPI remaining at 3.0%. If these estimates are correct, they will signal that the Fed is struggling to bring inflation to the 2.0% target.
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Still, the report will likely not change the next actions of the Federal Reserve, which seems committed to start cutting interest rates as soon as in its September meeting. The Fed is now more concerned about the labor market than inflation.
The US will also publish the latest retail sales, manufacturing, and industrial production data on Thursday.
In the UK, the Office of National Statistics (ONS) will publish the July inflation report on Wednesday. The consensus view is that the country's inflation rose from 2.0% in June to 2.3% in July while the core CPI moved from 3.5% to 3.4%.
If these numbers are correct, they could push the BoE to slow down its interest rate cuts. In its last decision, the bank decided to slash interest rates by 0.25% in a bid to support the country's economic recovery/USD technical analysis
The GBP/USD retreated to a low of 1.2663 on Thursday and then bounced back to 1.2760. On the daily chart, it remains below the key resistance point at 1.2825, its highest point in December last year, and 1.2895, its highest swing in March.
The pair has remained below the 50-day and 25-day Exponential Moving Averages (EMA). It is also between the Woodie pivot point and its first support line. Therefore, the pair will likely remain in this range ahead of the upcoming UK and US inflation reports. The key support and resistance points to watch will be at 1.2663 and 1.2825.
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