GBP/USD Forex Signal 18/12: Bullish Forecast (Chart)

(MENAFN- Daily Forex) Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3500.
• Add a stop-loss at 1.3300.
• Timeline: 1-2 days.

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3300.
• Add a stop-loss at 1.3500.

The GBP/USD dropped slightly after the Office of National Statistics (ONS) published the latest UK inflation and jobs data. It was trading at 1.3370 ahead of the upcoming US inflation data and BoE interest rate decision Decision and US Inflation Report

The GBP/USD pair retreated after a report released on Tuesday showed that the country's unemployment rate rose and wages dropped in October this year. This report also showed that the economy lost thousands of jobs during the month.

Another separate report released on Wednesday revealed that UK inflation dropped sharply in November. The headline and core inflation figures dropped to 3.2% on an annual basis, while the retail price index fell to 3.8%.

Therefore, a combination of falling inflation and weak labor market means that the Bank of England (BoE) will cut interest rates when it concludes its two-day meeting later today.

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Economists see the committee bringing rates from the current 4% to.5%, a move that is meant to supercharge the economy, which is showing signs of slowing down. This slowdown may accelerate after the recent autumn budget in which Rachel Reeves boosted taxes substantially.

The other key catalyst for the GBP/USD pair will be the upcoming US inflation report, which will provide more information about the state of the economy. Economists polled by Reuters expect the report to show that the headline CPI rose from 3.0% in October to 3.1% in November, while core CPI dropped to 3.0%.

There are signs that inflation will start coming down as energy prices cool. Data shows that Brent and West Texas Intermediate (WTI) dropped below $60 this week. They only rose slightly this week after Donald Trump boosted pressure on Venezuela.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The daily chart shows that the GBP/USD pair was trading at 1.3375, a few points below this week's high of 1.445. This decline happened as investors reacted to the upcoming BoE rate decision after the UK inflation report.

It remains above the Supertrend indicator, which is a bullish sign. Also the 50-day and 100-day Exponential Moving Averages (EMA) are about to make a bullish crossover pattern.

Therefore, the pair will likely continue rising as bulls target the key resistance level at 1.3500. The bullish outlook will be invalidated once the pair drops below the psychological point at 1.3300.

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