(
MENAFN- Daily Forex) Bearish View
- Sell the GBP/USD pair and set a take-profit at 1.2000.
- Add a stop-loss at 1.2300.
- Timeline: 1-3 days.
Bullish View
- Set a buy-stop at 1.2220 and a take-profit at 1.2300.
- Add a stop-loss at 1.2200.
The GBP/USD pair continued its strong downtrend ahead of the crucial American and United Kingdom consumer inflation data. It slipped to the psychological point at 1.2200, its lowest level since November 2023. It has dropped by almost 10% from its highest level in 2023.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money UK and US Inflation Data Ahead
The GBP/USD exchange rate has continued its strong downward trend this year after signs of a potential divergence between the Federal Reserve and Bank of England (BoE) emerged.
Economists anticipate that the Federal Reserve will maintain a hawkish tone, especially after the US released strong jobs numbers on Friday. The report showed that the unemployment rate dropped to 4.1% as the economy added 256k jobs.
The next important data to watch will be the upcoming US consumer inflation data scheduled on Wednesday. Economists expect the data to show that the country's inflation continued rising in December as the holiday shopping continued. Most retailers like Walmart, Target and Costco have published robust holiday sales data.
The headline CPI is expected to come in at 2.9%, higher November's 2.7%, while the core CPI will be 3.4%. US inflation has remained at a stubbornly high level in the past few months, with the Fed expecting it to move to 2% later this year or in 2025.
The other important data to watch will be the UK inflation report on Wednesday. This will be a crucial report since it will provide more information about price movements and help to determine the next actions by the Bank of England (BoE).
Analysts expect these numbers to show that the headline CPI rose by 2.6% in December, while the core CPI slowed from 3.5% to 3.4%. Strong inflation numbers will complicate the BoE's action since they will confirm that the country was in a stagflation/USD Technical Analysis
The GBP/USD pair continued its strong downward trend and crossed the important support level at 1.2300, the lowest swing in May 2024. It also formed a death cross pattern as the 50-day and 200-day moving averages flipped each other. This cross is one of the most bearish patterns in the market.
The pair has dropped below the ultimate support level at 1.2200, while the Average Directional Index (ADX) has moved to 33. That is a sign that the trend is significantly strong.
Therefore, the pair will likely continue falling as bears target the extreme oversold level at 1.1965 in the next few weeks. The immediate target will be the oversold point at 1.2000.
EURUSD Chart by TradingView
Ready to trade our free trading signals ? We've made a list of the best UK forex brokers worth using.
MENAFN13012025000131011023ID1109084419
Comments
No comment