GBP/USD Signal 26/08: On The Cusp Of A Bullish Break (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 exchange rate retreated as the US dollar index rebounded on Monday. It dropped to a low of 1.3450, down from last Friday's high of 1.3553 as attention turned to key macro data from the US Dollar Rises as Risk-Off Sentiment Resumes

The GBP/USD exchange rate dropped as the US dollar index jumped by almost 1% on Monday as a risk-off sentiment prevailed.

This performance coincided with the happenings among other assets, with the US equities and the crypto market falling and erasing the gains made late last week.

The GBP/USD pair was reacting to Jerome Powell's speech in which he signaled that the bank would consider cutting interest rates to cushion the labor market after recent data pointed to cracks. The unemployment rate jumped to 4.2%, while hiring by many large and small and medium size companies has largely stalled.

Companies say that the caution is tied to Donald Trump's tariffs, which have raised import costs in the past few months. Trump has placed a minimum tariff of 10% and raised some levies to as high as 50%.

The next important GBP/USD news will come out later on Tuesday when the Conference Board publishes the August consumer confidence report. Economists expect the data to show that confidence improved slightly in August.

However, it is likely that the confidence dropped in August after the weak jobs report and as inflation expectations jumped to the highest level in months.

Consumer confidence is a closely-watched economic data because consumer spending is the biggest part of the GDP. As a result, an improving consumer figure points to a stronger economic growth in the United States.

The GBP/USD pair will also react to statements by Federal Reserve's Tom Barkin and Bank of England's Catherine Mann.

EURUSD Chart by TradingViewEUR/USD Technical Analysis

The GBP/USD exchange rate pulled back to a low of 1.3447, down from a last week's high of 1.3593. It remains much lower than the year-to-date high of 1.3790.

The pair has retested the important support at 1.3435, its highest point in September last year. It is also trading at the 50-day Exponential Moving Average (EMA).

The pair has formed an inverse head-and-shoulders pattern. Therefore, it will likely rebound as bulls target the year-to-date high of 1.3700. A move below the support at 1.3300 will invalidate the bullish view.

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