(MENAFN- Daily Forex) Bullish View
Buy the GBP/USD pair and set a take-profit at 1.2850. Add a stop-loss at 1.2600. Timeline: 1-3 days.
Bearish View
Sell the GBP/USD pair and set a take-profit at 1.2600. Add a stop-loss at 1.2850.
The GBP/USD pair rose for the third consecutive day, ending a downtrend that started in September when it peaked at 1.3428. The pair was trading at 1.2737, up by 2% above its lowest level last week.
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US Dollar Retreats Ahead of Key US Data
The GBP/USD exchange rate bounced back as the US dollar index softened. The dollar index, which gauges the performance of the greenback against a basket of currencies, retreated from $108 to $105.78, its lowest point since November 12.
This retreat happened after the US published several important economic numbers. The data showed that the economy expanded by 2.8% in the third quarter. Another report showed that the PCE, the Fed's favorite inflation gauge, rose to 2.3% in October.
The PCE rose by 0.2% on a MoM basis, while the core figure rose by 0.3%. These numbers suggest that the Federal Reserve may opt to leave interest rates unchanged in its meeting in December.
The odds of cutting interest rates will be determined by this week's nonfarm payroll (NFP) data scheduled for Friday. These numbers will provide more color about the labor market, which has been fairly weak in the past few months.
The last NFP data showed that the economy created just 12,000 in October, lower than the expected 100k. This week's numbers are expected to show that the economy created 202k jobs in November. The unemployment rate is expected to come in at 4.2%, an improvement from the previous 4.1%.
The other important event to watch will be a statement by Jerome Powell, the head of the Federal Reserve/USD Technical Analysis
the GBP/USD exchange rate has bounced back in the past few days, moving from a low of 1.2485 to 1.2737, its highest point since November 13. It has moved to the 50% Fibonacci Retracement level at 1.2735.
EURUSD Chart by TradingView
The pair's rebound happened after it formed a hammer pattern, which is a popular reversal sign. The two lines of the MACD indicator have formed a bullish crossover pattern, a bullish sign. Also, the Relative Strength Index (RSI) has pointed upwards.
Therefore, the pair will likely continue rising as bulls target the 38.2% retracement level at 1.2900. On the flip side, a drop below the key support at 1.2600 will invalidate the bullish view.
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