Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2800.
- Add a stop-loss at 1.2618.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2650 and a take-profit at 1.2592.
- Add a stop-loss at 1.2750.
The GBP/USD price was flat on Tuesday morning in a low-volume environment. It was hovering at 1.2700, where it has been in the past few days as traders waited for the upcoming US jobs numbers.
Muted economic calendar
The GBP/USD pair is having a slow start of the quarter because of the ongoing America independence day celebrations. As a result, the daily volume on Monday was lower than normal even though US markets were open half day. American investors and traders will not be active on Tuesday since the market will be closed.
The only important data on Monday was the mixed manufacturing PMI numbers from the US and the UK. In the UK, the manufacturing PMI came in at 46.5 in June, better than the flash estimate of 46.2. In the US, data by the ISM revealed that the manufacturing PMI dropped to 46.0.
The two numbers mean that the manufacturing sector in the two countries is contracting despite the actions by the government to spur the sector. In the United States, the Biden administration has set aside billions of dollars to incentivise semiconductor manufacturing. The government also passed the Inflation Reduction Act (IRA) and a trillion-dollar infrastructure bill.
There is no economic data scheduled in the calendar on Tuesday. Therefore, traders will be focusing on the upcoming US jobs numbers. While the non-farm payroll (NFP) report is important, its impact on the Fed will be limited.
GBP/USD technical analysis
The shorter-term chart pattern shows two important bullish patterns. The pair formed a cup and handle pattern, whose upper side was at 1.2680. It moved above this level last week and jumped to the year-to-date high of 1.2850.
The pair has also formed a broadening wedge pattern, which is shown in blue. In price action analysis, this is a bullish pattern as well. Further, the pair is above the ascending trendline shown in green and the 50-period moving average.
Therefore, there is a likelihood that the GBP/USD pair will have a bullish breakout in the coming days. If this happens, the next resistance level to watch will be at 1.2800. The support of this trade is at 1.2592, the lowest point on Thursday.
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