Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2900.
- Add a stop-loss at 1.2760.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2740.
- Add a stop-loss at 1.2925.
The GBP/USD exchange rate price rose slightly as investors waited for the upcoming interest rate by the Bank of England (BoE). The pair rose to 1.2850, which was higher than last week’s low of 1.2765.
Bank of England's decision next
The GBP/USD dropped to a multi-week low of 1.2764 after the latest interest rate decision by the Federal Reserve. In its meeting, the bank decided to hike interest rates by 0.25%, the highest level in 22 years.
The pair then bounced back on Friday after the latest personal consumption expenditure (PCE) data. On Friday, numbers from the US showed that the headline PCE dropped to 3.1% in June while core PCE fell to 4.6%.
Earlier numbers showed that the headline consumer price index (CPI) dropped to 3.0% while the core CPI dropped to 4.8%. These numbers confirmed that the country’s inflation continued to drop in June.
The next important news to watch will be the upcoming interest rate decision by the Bank of England (BoE) scheduled for Thursday. Economists polled by Reuters believe that the bank will decide to hike by 0.25% and push them to 5.25%.
Like the Fed and ECB, analysts believe that the bank is about to end its interest rate hikes since the country’s economy is slowing. Inflation remains significantly high, with the headline CPI falling to 7.9% in June.
On Monday, the key data to watch will be mortgage numbers. With mortgage rates rising, analysts expect that approvals rose to 49.4k in June from the previous 50.2k. Nationwide will also publish the latest house price index (HPI) data.
GBP/USD technical analysis
The GBP/USD exchange rate was trading at the important psychological level at 1.2850, which is also the highest point in June. It is above the ascending trendline that connects the lowest levels since May 26th. The pair remains slightly below the 50-period moving average while the Average True Range (ATR) has risen.
Also, the MACD has moved below the neutral point. Therefore, the pair will likely hold at this point on Monday as traders wait for the upcoming Bank of England (BoE) decision. The key support and resistance levels to watch will be at 1.2760 and 1.2900.
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