Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2785.
- Add a stop-loss at 1.2675.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2685 and a take-profit at 1.2600.
- Add a stop-loss at 1.2750.
The GBP/USD pair continued its uptrend as the US dollar index (DXY) retreated in the overnight session. It jumped to a high of 1.2735, its highest level since February 2nd. It has risen by more than 1.55% from its lowest point this year.
US ADP jobs data ahead
The GBP/USD exchange rate continued soaring after the mixed PMI numbers from the UK and the US. According to S&P Global, the country’s services PMI dropped from 54.3 to 53.8, weaker than the median estimate of 54.3.
The composite PMI rose slightly from 52.9 in January to 53, also weaker than the estimated 53.3. These numbers mean that the services sector is still growing since it was above the expansion zone of 50.
In the US, data by the ISM revealed that the non-manufacturing PMI retreated from 53.4 to 52.6, also lower than the expected 53.0. Another report showed that the country’s factory orders dropped by 3.6% after falling by 0.3% in December.
There will be several important events on Wednesday. In the UK, Chancellor Jeremy Hunt will deliver his Spring Budget and his estimate of the economy. Media reports suggest that he will cut 2% of the country’s national insurance payroll tax in his annual budget.
S&P Global will also publish the latest construction PMI report. Estimates are that the PMI rose slightly from 48.8 in January to 49.0 in February.
The other important events will be from the United States. ADP will release the latest JOLTs job openings numbers. These numbers are expected to show that the private sector rose by 149k in February after adding 107k in January. The report will come two days ahead of the latest NFP data.
Mary Daly and Neel Kashkari, two Federal Reserve officials will deliver statements, which will provide hints about the next actions.
GBP/USD technical analysis
The GBP/USD pair has been in a strong bullish trend in the past few weeks. It rose to a high of 1.2735, its highest point since February 2nd. The pair has moved above the 50-period moving average and the Ichimoku Cloud indicator.
Further, the MACD indicator has risen above the neutral point while the Klinger Oscillator has pointed upwards. It is also hovering at its highest point on February 22nd. The pair will likely continue rising, with the next target being at 1.2785, its highest point on January 12.
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