GBP/USD Forex Signal 22/01: Strong Bullish Breakout (Chart)

(MENAFN- Daily Forex) Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3565.
• Add a stop-loss at 1.3300.
• Timeline: 1-2 days.

Bearish view

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

The GBP/USD exchange rate held steady after the Office of National Statistics (ONS) published strong inflation data, which raised the odds of a more hawkish Bank of England (BoE). It was trading at 1.3430, up modestly this week's low of 3350 Inflation Continues Rising

The GBP/USD rose after the Office of National Statistics released a strong UK consumer inflation report. Inflation continued rising in December as the prices of most items rose.

The headline Consumer Price Index (CPI) rose from 3.2% in November to 3.4% in December, while the core inflation remained steady at 3.2%. More data showed that the Producer Price Index (PPI) rose to 3.4%, while the Retail Price Index (RPI) jumped to 4.2%.

These numbers mean that the Bank of England may maintain interest rates at the current level in the coming meetings, while analysts expect the Federal Reserve to deliver several rate cuts.

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The GBP/USD pair also reacted to the decision by Donald Trump to suspend his tariff threat against the UK and other European countries for their support of Denmark. He announced that after meeting with the NATO Secretary General in Switzerland at the World Economic Forum.

Looking ahead, the UK will publish the final estimate of the third quarter GDP report. Economists expect the data to show that the economy continued growing in the quarter, with the final figure being over 4%.

The US will also publish the latest Personal Consumption Expenditure (PCE) and initial jobless numbers.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The daily chart shows that the GBP/USD pair was relatively unchanged at the strong pivot reverse level of the Murrey Math Lines tool at 1.3423. It rose slightly above the 23.6% Fibonacci Retracement level at 1.3386.

The pair moved slightly above the 50-day Exponential Moving Average (EMA), and has formed a bullish flag pattern. This pattern is made up of a vertical line and a descending channel. It has also formed an inverted head-and-shoulders pattern.

Therefore, the pair will likely have a bullish breakout, with the next key target being at 1.3565. A move above that level will point to more gains to the Ultimate Resistance at 3670 BTC/USD pair rose for the second consecutive day, moving above the important resistance leve;

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