GBP/USD Forex Signal 22/09: Rising Wedge (Chart)

(MENAFN- Daily Forex) Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3335.
• Add a stop-loss at 1.3600.
• Timeline: 1-2 days.

Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3600.
• Add a stop-loss at 1.3335.

The GBP/USD exchange rate crashed below the important support at 1.3500 after the Federal Reserve and the Bank of England delivered their interest rate decisions. It was trading at 1.3470 on Monday, down sharply from this month's high of 3732 and Federal Reserve Interest Rate Decision

The GBP/USD pair pulled back after a monetary policy divergence between the Federal Reserve and the Bank of England.

In its statement, the Fed decided to cut interest rates for the first time this year, as most analysts were expecting. It cut rates by 0.25%, bringing the official cash rate between 4.0% and 4.25%.

The dot plot, which provides estimates for the future of interest rates, showed that officials expect two more cuts this year. Analysts expect that the bank will deliver more cuts next year if the labor market fails to improve.

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The key catalyst for the pair this week will be statements by senior officials. One of them will be Stephen Miran, who became a Fed governor last week and voted to cut rates by 50 basis points. Other top officials who will talk on Monday are Tom Barkin and Beth Hammack.

The GBP/USD pair also slipped after the Bank of England (BoE) left interest rates unchanged. Officials warned that inflation was still too high in the country. The pair also reacted to the stronger-than-expected retail sales data and weak jobs numbers.

The UK economy is facing a doom loop, which is characterized by slow economic growth, high inflation, high taxes, and widening budget deficits.

Looking ahead, the GBP/USD pair will react to the upcoming flash manufacturing and services PMI numbers, which will provide more color on the state of the UK and US economies.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The daily timeframe chart shows that the GBP/USD pair has pulled back in the past few days. It moved from a high of 1.3732 to the current 1.3470.

This retreat happened after it formed a shooting star candlestick pattern, a popular bearish reversal sign. It also formed a rising wedge pattern, whose two lines converged.

The pair has moved below the 50-day moving average. It has also moved to the upper side of the Ichimoku cloud indicator, while the Relative Strength Index has pointed downwards.

Therefore, the pair will likely continue falling on Monday as sellers target the key support at 1.3334.

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