(MENAFN- Daily Forex) Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3140.
• Add a stop-loss at 1.3500.
• Timeline: 1-2 days.

Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3500.
• Add a stop-loss at 1.3140.

The GBP/USD exchange rate was flat on Wednesday as investors reacted to the statements by Jerome Powell and Andrew Bailey. It was trading at 1.3330, down from the September high of 3725 Powell and Andrew Bailey Statements

The GBP/USD pair was in a tight range after Jerome Powell delivered a relatively dovish statement. In a statement, Powell said that the bank may stop shrinking its balance sheet in the coming months, an important shift that is necessary to preserve liquidity in the overnight funding markets.

Powell also expressed concerns that the labor market has continued to weaken even though the Bureau of Labor Statistics did not publish the September jobs numbers because of the ongoing government shutdown. A report by ADP showed that the private sector lost 36,000 jobs in September.

Economists largely support the view the Federal Reserve will deliver another interest rate cut in October, a move that will bring the official cash rate to between 3.75% and 4%.

The GBP/USD exchange rate also wavered after the Office of National Statistics (ONS) published relatively weak jobs numbers. The report showed that the unemployment rate rose from 4.7% in July to 4.8% in August the highest level in four years.

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This report also showed that the number of Britons filing for jobless claims rose by 25,000 after falling by 2,000 in the previous month. The number of people in payroll fell by 10,000, a sign that the economy is not doing well.

These numbers send further signal that the UK is in a period of stagflation, which is characterized by high inflation and slow economic growth. In a statement, Bank of England's Bailey noted that he was surprised by the weak jobs numbers.

His statement is notable because he has become the swing vote on the nine-member committee. Economists see a slim chance that the bank will cut interest rates before the end of the year.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The daily timeframe chart shows that the GBP/USD exchange rate has wavered in the past few days. It was trading at 1.3327, slightly higher than this week's low of 1.3250.

It has dropped below the 23.6% Fibonacci Retracement level at 1.3390. Also, it has formed a head-and-shoulders pattern, which often leads to more downside.

Therefore, the pair will likely continue falling as sellers target the next important support level at 1.3140, its lowest level in August this year.

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