GBP/USD Forex Signal Today 22/05: Cup And Handle (Chart)

(MENAFN- Daily Forex) Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3600.
• Add a stop-loss at 1.3350.
• Timeline: 1-2 days.

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3350.
• Add a stop-loss at 1.3600.

The GBP/USD pair soared to a multi-year high, moving above the upper side of the cup and handle pattern after the latest UK consumer inflation data. It jumped to a high of 1.3465, up by over 11.3% from its lowest point this year.

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The GBP/USD pair continued soaring after a report by the Office of National Statistics (ONS) pointed to a more hawkish Bank of England (BoE) this year.

Data revealed that the headline consumer price index (CPI) rose from 0.3% in March to 1.2% in April, higher than the median estimate of 1.1%. This increase led to a 3.5% annual increase, a big increase from the previous 2.6%.

Core inflation, which excludes the volatile food and energy products, jumped from 0.5% to 1.4%, also higher than the median estimate of 1.2%. It has jumped from 3.4% to 3.8% on an annual basis.

These numbers mean that inflation is a major challenge in the UK and that the country is in a stagflation, a period characterized by high inflation and slow economic growth. Historically, this is one of the most difficult economic conditions to be in since cutting rates will lead to higher inflation, while hiking will affect the economic growth.

The next key GBP/USD exchange rate news will be the flash manufacturing and services PMI data from the UK. Economists expect the data to show that the manufacturing PMI remained below 50, while the services figure rose to 50.

S&P will also release the flash PMI numbers from the US. The US manufacturing PMI is expected to be 49.9, while the services figure will be 51. The other top data to watch will be the upcoming US initial and continuing jobless claims data.

EURUSD Chart by TradingViewGBP/USD technical analysis

The GBP/USD pair rose to a high of 1.3465 after the latest UK inflation data. It moved above the upper side of the bullish flag chart pattern, a popular continuation sign.

The pair has formed a cup and handle pattern, with the flag section being part of the handle. His cup has a depth of about 9.5%. As such, measuring the same distance from the cup's upper side means that it will jump to 1.4720 in the long term.

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