GBP/USD Signal Today - 02/01: Double-Bottom Rebound (Chart)

(MENAFN- Daily Forex) Bearish View

• Sell the GBP/USD pair and set a take-profit at 1.2400.
• Add a stop-loss at 1.2615.
• Timeline: 1-2 days.

Bullish View

• Buy the GBP/USD pair and set a take-profit at 1.2615.
• Add a stop-loss at 1.2400.

The GBP/USD pair remained unchanged on Thursday, as the strong US dollar remained in the market. It was trading at 1.2515, near its lowest level since May 9 last year. It has dropped almost 7% from its highest level in 2024.

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The pair's price action will be relatively muted on Thursday since many investors remain in holiday. Most of the volume will start creeping back up on Monday as offices reopen after the Christmas season.

There will also be no major economic data on Thursday. The only key data to watch will be the upcoming Nationwide House Price Index (HPI), which will provide more data on the housing market. Economists expect the data to show that house prices rose by 0.1% in December from 1.2% in November. The figure will translate to an annualized gain of 3.8%, higher than November's 3.7%.

The other data will be the UK and US manufacturing PMI data by S&P Global. Economists expect the data to reveal that the PMI dropped from 48 in November to 47.3 in December, a sign that the industry is in a contraction zone.

The same trend is expected in the United States, where analysts expect the figure to come in at 48.3 from 49.7 in December.

These numbers will likely not change the view of the Bank of England and the Federal Reserve. Economists expect the two central banks to diverge, with the BoE expected to be more dovish than the Fed/USD Technical Analysis

The daily chart shows that
the GBP/USD exchange rate has been in a downtrend. However, the downtrend momentum has recently faded as the pair has formed a double-bottom pattern around the support at 1.2500, a few points below the 61.8% Fibonacci Retracement level. The neckline of this pattern is at 1.2800.

The pair has remained below the 50-day and 200-day moving averages, which have formed a death cross pattern. Also, most oscillators have pointed downwards in the past few days.

Therefore, a break below the support at 1.2500 will invalidate the double-bottom pattern and point to more downside in the near term. If this happens, the pair will likely drop to the next point at 1.2400. In the alternative scenario, the double-bottom works out well, leading to more upside.

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