GBP/USD Signal 05/11: Nears Overbought Zone Ahead Of Boe

(MENAFN- Daily Forex) Bullish View

Buy the GBP/USD pair and set a take-profit at 1.3600. Add a stop-loss at 1.3385. Timeline: 1-2 days.

Bearish view

Sell the GBP/USD pair and set a take-profit at 1.3385. Add a stop-loss at 1.3600.

The GBP/USD pair has held steady in the past few days, and the trend accelerated after the midterm elections, in which Democrats won the Senate and the House of Representatives. It jumped to the important resistance level of 1.3500, its highest point since September 14, with focus shifts to the upcoming Bank of England decision.

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The GBP/USD pair has continued rising, even after a report showed that the UK services and composite PMIs came short of expectations. The services PMI came in at 52.8, lower than the expected 53.1, while the composite figure of 52.9 was lower than the expected 53.1.

Focus now shifts to the upcoming Bank of England interest rate decision. Economists expect the bank to hike interest rates by 0.25% as it fights to lower the elevated inflation rate, which has remained at an elevated level in the past few months.

Traders and investors will focus on the statement from Governor Andrew Bailey and other BoE officials. These officials will provide more information about what to expect in the December meeting and next year.

The GBP/USD pair rose after the US published the latest nonfarm payrolls data. This report showed that the private sector added 86k jobs last month, much higher than the expected 67k. This figure came two days before the official jobs report from the Bureau of Labor Statistics (BLS).

A strong jobs report will raise the possibility of the Federal Reserve hiking rates at its last meeting of the year. That's because inflation remains substantially higher than the Federal Reserve's target of 2.0%.

The pair also jumped after Democrats won the House and the Senate, a move that will lead to gridlock in the country.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The daily chart shows that the GBP/USD pair has been in a strong rally in the past few weeks and is hovering at its highest point in weeks. It has now moved above the 50-day Exponential Moving Average (EMA) and is along the upper side of the Bollinger Bands.

The pair has also jumped above the 38.2% Fibonacci Retracement level. Also, the Relative Strength Index (RSI) has continued rising and is now nearing the overbought level of 70. Therefore, the pair will likely continue rising ahead of the BoE decision. However, there is a risk that it will drop as investors start booking profits

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