Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2300.
- Add a stop-loss at 1.2100.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2180 and a take-profit at 1.2050.
- Add a stop-loss at 1.2250.
The GBP/USD forex price has been in a bullish trend in the past few days as investors reflect on important economic numbers. It rose to a high 1.2242 last week, the highest point since December 19. The pair has been in a strong bullish trend as the US dollar index has plunged from $115 in 2022 to $102.
UK inflation and retail sales data
The GBP/USD price drifted upwards after the US published its inflation data last Thursday. In a report, the Bureau of Labor Statistics (BLS) said that the country’s inflation continued to retreat in December. It has fallen in the past six straight months and some analysts are concerned about a possibility of a deflation in the US as a sea of change happens in the economy.
Inventories remain high amid concerns of a recession. Despite the positive recent data, including on employment, some economists believe that the American economy will contract in 2023. A survey of economists by the Wall Street Journal showed that a likelihood of a recession rose to 61%. Financial results by top Wall Street banks showed that they were predicting a mild recession.
The GBP/USD also inched upwards after the latest UK GDP data that came out on Friday. These numbers revealed that the economy eked out a small gain in November, defying what analysts were expecting. It expanded by 0.1% in November, which was better than the expected contraction of 0.2%. The economy contracted by 0.3% in the third quarter.
The GBP/USD price will react to the upcoming economic data from the UK. On Tuesday, the Bureau of Labor Statistics (BLS) will publish the latest jobs numbers. They will be followed by the latest UK inflation numbers on Tuesday. Like in the US, economists expect that inflation dropped slightly in December.
GBP/USD forecast
The GBP/USD has drifted upwards in the past few days. In this period, it has managed to move above the 25-day and 50-day moving averages. It also rose slightly above the important resistance level at 1.2200, the highest point on January 9. Also, the pair moved above the upper side of the descending channel and the Ichimoku cloud.
Therefore, the pair will likely have a bullish breakout this week as the UK publishes important economic data. If this happens, the pair will likely continue rising as buyers target the key resistance point at 1.2300.
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