GBP/USD Forex Signal Today 28/5: Retest Then Rebound (Chart)

(MENAFN- Daily Forex) Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3430.
• Add a stop-loss at 1.3695.
• Timeline: 1-2 days.

Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3695.
• Add a stop-loss at 1.3430.

The GBP/USD exchange rate pared back some of the recent gains as the US dollar jumped after the strong consumer confidence report. It dropped to 1.3510, down from the year-to-date high of 3592 dollar index plunge takes a breather

The GBP/USD pair retreated as the US dollar index bounced back after the strong consumer confidence report.

A report by the Conference Board showed that consumer confidence bounced back sharply in May as Donald Trump showed his openness to reach a trade deal with other countries. He has already reached a deal with China and the UK, and on Tuesday, he said that talks with the European Union were going on well.

The rising consumer confidence means that the US will likely avoid a recession as some analysts were expecting. In most cases, a recession normally happens when the confidence figure drops by 20 basis points in a three-month period.

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The GBP/USD exchange rate will next react to the latest Federal Reserve minutes and important economic data from the US.

Historically, Fed minutes lead to heightened volatility of the US dollar since they provide more information with what officials discussed in the last meeting. They also provide signals on what to expect in the following meeting.

These minutes, however, will not lead to more volatility because analysts have already priced in what to expect from the Fed. Jerome Powell and other officials have insisted that they will not be in a hurry to cut interest rates.

The FOMC minutes will be followed by the upcoming US GDP data and initial and continuing jobless claims on Thursday, and personal consumption expenditure (PCE) on Friday.

EURUSD Chart by TradingViewGBP/USD technical analysis

The GBP/USD exchange rate retreated from a high of 1.3592 to 1.3513 as the US dollar index bounced back. Still, despite the pullback, the pair remains above the important support point at 1.3430, the upper side of the cup-and-handle pattern.

The pair has moved above the 50-day Exponential Moving Average (EMA). Also, the Relative Strength Index (RSI) and the MACD indicators are still pointing upwards. Therefore, the pair will likely drop and retest the support at 1.3430 and then resume the uptrend. This is known as a break and retest pattern, a popular continuation sign. The long-term outlook is bullish because of its cup and handle pattern.

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