(MENAFN- Daily Forex) Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3300. Add a stop-loss at 1.3140. Timeline: 1-2 days.
Bearish view
Set a sell-stop at 1.3175 and a take-profit at 1.3100. Add a stop-loss at 1.3250.
The GBP/USD currency pair retreated slightly as the recent strong rally stalled. It dropped from this month's high of 1.3262 to a low of 1.3185 as the focus shifted to the upcoming US
GDP and Personal Consumption Expenditure (PCE) report GDP and PCE report
The Bureau of Economic Analysis (BEA) will publish the second estimate of US GDP data on Thursday.
Economists, based on the first estimate, expect the data to show that the country's economy expanded by 2.8% in Q2 after slowing down by 1.4% in the previous quarter.
The report is usually accompanied by one on corporate profits and wholesale inventories. Unless the number is higher or lower than these estimates, it will not have a big impact on the greenback.
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The US will also release the closely-watched initial and continuing jobless report. In most periods, this report is usually not watched closely. However, with the Fed now fully focused on the labor market, it may have an impact. This data will come a week ahead of thee US nonfarm payrolls data.
The other notable data will come out on Friday when the US releases the PCE data. Economists expect the data to show that the headline and core PCE retreated slightly in August. If this is correct, it will confirm the view that the Fed will cut rates in September.
In a statement at the Jackson Hole Symposium last week, Jerome Powell hinted that time had come for the bank to change its monetary view.
The case to cut has was also made on Wednesday after reports by a few retailers like Kohls, Bath & Body Works, and JM Smucker showed that consumer spending was not all that strong. They all slashed their forward guidance, citing the challenging economy/USD technical analysis
The GBP/USD pair has been in a strong bull run, helped by the softness of the US dollar and the modestly positive UK economic numbers. Most recently, it rose above key resistance levels at 1.3042 and 1.3140, the highest swing in July and December last year.
The pair has constantly been above the 50-day and 25-day moving averages. It also formed an inverse head and shoulders chart pattern, a popular reversal sign.
Therefore, the ongoing weakness is happening as some bulls capitulate ahead of next week's NFP data. The pair will likely resume the bullish trend as bulls target the key point at 1.3300.
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