Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3050.
- Add a stop-loss at 1.2900.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2930 and a take-profit at 1.2850.
- Add a stop-loss at 1.3025.
The GBP/USD exchange rate rose in the overnight session as investors reacted to the latest interest rate decision by the Federal Reserve. It jumped to a high of 1.2977, the highest level since July 19th.
US GDP data ahead
The GBP/USD exchange rate continued rising after the relatively muted interest rate decision by the Federal Reserve. In it, the bank decided to hike interest rates by 0.25% as its battle against inflation continued.
By doing that, the bank pushed rates to between 5.25% and 5.50%, the highest point since 2002. While Jerome Powell welcomed the recent inflation trends, he noted that the fight was not yet won.
Therefore, the Fed left room for another rate hike in its August meeting. Analysts had a mixed opinion about what to expect in the coming months. Some analysts believe that the bank has ended its rate hikes. Some, however, expect at least one more increase later this year.
The US will publish the latest GDP numbers later on Thursday. Economists polled by Reuters and Bloomberg believe that the economy expanded by 1.8% in Q2 after growing by 2.0% in the first quarter.
This economic growth was driven by robust consumer spending during the quarter. Data published this month showed that consumer confidence jumped to 117 as fears about inflation eased.
The other important data to watch will be America’s durable goods orders, consumer spending, and personal consumption index. Economists expect the data to show that core durable goods rose by 0.1% in June.
Looking ahead, the Bank of England (BoE) will meet next week. Like the Fed, the bank will likely decide to hike interest rates by 0.25% to 5.25%. UK’s inflation has held stubbornly higher than in most countries.
GBP/USD technical analysis
The GBP/USD exchange rate continued rising after the Fed decision. As it rose, the pair is approaching the first support of the Andrews pitchfork. It also moved slightly above the 38.2% retracement point while the Relative Strength Index (RSI) has moved close to the overbought level.
The MACD has moved above the neutral point. Therefore, the pair will likely continue rising as buyers target the next key resistance level at 1.3050. The alternative scenario is where the GBP/USD pair retreats and moves below the key support at 1.2900.
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