(MENAFN- Daily Forex) Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3100.
• Add a stop-loss at 1.3300.
• Timeline:1-2 days.

Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3300.
• Add a stop-loss at 1.3100.

The GBP/USD pair pulled back this week as traders assessed the next actions by the Bank of England (BoE) and the Federal Reserve. It retreated to the important support at 1.3200 from this week's high of 3275 Fed and BoE Rate Cuts

The GBP/USD pair retreated as market participants assessed what the Fed and the BoE will do in the next meeting. Economists predict that the BoE will cut rates even as inflation has remained stubbornly high in the past few months.

A Polymarket poll shows that the odds that the bank will cut rates in this meeting have jumped to 94%. The poll also shows that the bank will then leave rates unchanged in the January meeting.

Recent data showed that the UK inflation retreated to 3.6% in October from the previous 3.8%. While the decline was welcome, it remained much higher than the BoE's target of 2.0%. In a recent statement, Andrew Bailey predicted that inflation was coming down, which may help to justify the rate cut.

Meanwhile, odds that the Federal Reserve will cut have also jumped from below 50% to 90% today. Odds that the Fed will cut rates have risen after recent statements by some officials like Christopher Waller and Michelle Bowman.

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These officials have warned that focusing on the labor market is a more important endeavor than inflation, which they note has stabilized in for past few weeks, with gasoline prices falling to the lowest level in over four years.

The next key catalyst for the GBP/USD exchange rate will be the S&P Global services and composite PMI report for the UK and the US. The ISM and S&P Global will also release the latest US PMI data.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The GBP/USD exchange rate peaked at 1.3275 on December 1 and then pulled back to the current 1.3200. It remains below the 50-day Exponential Moving Average (EMA).

The pair is also below the Supertrend indicator and has also formed a bearish flag pattern, which is made up of a vertical line and an ascending channel. It is also trading at the 38.2% Fibonacci Retracement level.

Therefore, the most likely GBP/USD forecast is bearish, with the next key target being the psychological level at 1.3100. A move above this week's high of 1.3275 will invalidate the bearish outlook.

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