GBP/USD Forex Signal 19/01: Falling Wedge Forms (Chart)

(MENAFN- Daily Forex) Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3565.
• Add a stop-loss at 1.3285.
• Timeline:1-2 days.

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3285.
• Add a stop-loss at 1.3565.

The GBP/USD exchange rate pulled back even after the Office of National Statistics (ONS) published strong UK economic data. It retreated to 1.3380, down from the year-to-date high of 1.3565, and is hovering near its lowest level since December 22nd Slips Ahead of UK Macro Data

The GBP/USD exchange rate retreated as investors reacted to the recent UK macro data and the latest development from the United States, where Donald Trump announced a new tariff on UK goods entering the country.

A report by the ONS showed that the economy expanded at a faster pace than expected, helped by the ongoing recovery of Jaguar Land Rover after last year's hack. It expanded by 0.3% in November, higher than the median estimate of 0.1%. The services sector expanded by 0.3%, while production rose by 1.1%.

Meanwhile, Donald Trump said that UK goods entering the country will be charged an extra 10% tariff, which will increase to 25% until he succeeds in acquiring Greenland.

Looking ahead, focus will be on the upcoming macro data from the UK, which will help the Bank of England (BoE) when making its future interest rate decisions. The UK will publish the latest jobs data on Tuesday, with economists expecting that the unemployment rate eased from 5.1% to 5%.

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The ONS will then publish the latest inflation report on Wednesday. Economists expect the data to show that the headline Consumer Price Index (CPI) rose slightly from 3.3% in November to 3.3% in December, while the core CPI moved to 3.3%. The closely-watched Retail Price Index (RPI) is expected to come in at 4% from the previous 3.8%.

If these estimates are accurate, it means that the BoE will be hesitant to cut interest rates in the coming meetings as inflation has remained above the 2% target for years.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The daily timeframe chart shows that the GBP/USD exchange rate has pulled back in the past few weeks, moving from a high of 1.3565 to the current 1.3380.

It has moved below the 23.6% Fibonacci Retracement level and the 25-day Exponential Moving Average (EMA).

On the positive side, the pair has formed a falling wedge pattern, which is made up of two descending and converging trendlines.

This wedge formed after the pair surged from a low of 1.3015 in November to a high of 1.3565. As such, this pullback is part of the formation of a bullish flag pattern.

Therefore, the most likely scenario is where it rebounds in the coming days, potentially to the year-to-date high of 1.3565.

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