(MENAFN- Daily Forex) Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3350. Add a stop-loss at 1.3140. Timeline: 1-3 days.
Bearish view
Set a sell-stop at 1.3225 and a take-profit at 1.3140. Add a stop-loss at 1.3350.
The British pound continued its strong rally this week, jumping to its highest point since March 2022. The GBP/USD pair has risen for the past three consecutive weeks and is up by over 27% from its lowest point in 2022.
Sterling has surged against the US dollar as traders focused on the mild divergence between Jerome Powell and Andrew Bailey, the head of the Bank of England (BoE).
In a statement at the Jackson Hole Symposiun last week, Powell said that the time had come for the bank to change policy. That statement was interpreted to mean that the bank would start cutting interest rates in its meeting in September.
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Bailey, on the other hand, has been cautious on what to expect next. While the BoE has started cutting rates, he has hinted that the bank may be cautious when determining the pace of the next cuts.
Additionally, the currency has received support from a series of positive economic numbers, which showed that the country was doing better than expected. For example, the manufacturing and services PMI numbers remained above 50 in August.
The UK's retail sales rose in July while the economy expanded at a faster pace in the second quarter. It grew by 0.6%, twice what analysts were expecting during the month. Therefore, some analysts expect that the central bank will move with cuts more slowly than previously thought.
The GBP/USD exchange rate rose after the US also published strong data on Tuesday. According to the Conference Board, the consumer confidence rose from 101.9 in July to 103.3 in August, higher than the expected 100.9.
Another report showed that the house price index softened by 0.1% in June from 0.0% in the previous month. Looking ahead, the key data to watch will be the US GDP data on Thursday and the PCE inflation report on Friday/USD technical analysis
The GBP/USD pair continued its strong bull run as it soared to its highest point in two years. It crossed the important resistance level at 1.3042, its highest level in July. It also jumped above the key point at 1.3140, its highest level in 2023.
The pair has soared above the 50-day moving average. Also, the Average Directional Index (ADX) has jumped to 32, its highest level since October last year, meaning that the rally is continuing.
The Relative Strength Index (RSI) and the momentum indicator have all risen. Therefore, the pair will likely continue rising, with the next reference level to watch being at 1.3300.
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