Bullish view
- Set a buy-stop at 1.3852 and a take profit at 1.3950.
- Add a stop-loss at 1.3750.
- Timeline: 1-2 days
Bearish view
- Set a sell-stop at 1.3800 and a take-profit at 1.3700.
- Add a stop-loss at 1.3850.
The GBP/USD price retreated in the overnight session as the impacts of the weak US jobs numbers faded. The pair dropped from 1.3891 to a low of 1.3826 ahead of the UK home price numbers.
UK Home Price Numbers
The key mover of the GBP/USD price will be the latest UK home price numbers to be published by Halifax, the company owned by Lloyds. The data is expected to show that the country’s home prices jumped in August as demand rose faster than supply.
Precisely, analysts expect the data to show that prices rose by 0.4% in July to 1.1% in the previous month. These numbers will come a week after the Nationwide Society published strong home price index.
The data revealed that the country’s average house price rose by 2.1% in August. As a result, values are about 13% higher than they were before the pandemic started. The average price of a home rose to about 248k in August.
Home prices have been driven by three main factors. First, the country’s interest rates are modestly lower than where they were before the pandemic started. As a result, the cost of borrowing has made prices so affordable.
Second, the government’s decision to give a stamp duty holiday has incentivised more people to acquire homes. And finally, all these measures have led to a higher demand at a time when builders are struggling to find construction workers. This was evidenced on Monday, when the construction PMI declined slightly.
With the US traders coming back from the long holiday, there is a likelihood that they will react to August’s jobs numbers. The data showed that the country’s labour market deteriorated slightly in August as the virus spread.
GBP/USD Technical Analysis
The GBP/USD price jumped to 1.3892 on Friday after the weak NFP data. This was the pair’s highest price since August 9. The pair has since then erased some of its recent gains and is slightly below the upper line of the black ascending channel. It is also along the 38.2% Fibonacci retracement level and is still slightly above the 25-day and 50-day moving averages.
Therefore, the pair wil remain in a bullish trend as long as it is above the two moving averages. Alternatively, the pair will drop and retest the lower side of the ascending channel and then resume the upward trend.
