The pair will likely keep rising as bulls target the 38.2% Fibonacci retracement level at 1.3470.
Buy the GBP/USD and add a take-profit at 1.3470.
Add a stop-loss at 1.3200.
Timeline: 2 days.
Set a sell-stop at 1.3280 and a take-profit at 1.3200.
Add a stop-loss at 1.3350.
The GBP/USD pair was little changed on Thursday morning as the market reflected on the statement by Jerome Powell and the strong economic data. The pair is trading at 1.3320, which is about 0.95% above the lowest level this week.
Strong UK and US Data
The GBP/USD pair wavered as investors reflected on the strong economic numbers from the US and UK. On Wednesday, data by Nationwide showed that the UK home prices continued rising in November as the supply and demand imbalance continued.
The home price index rose from 0.7% in October to 0.9% in November. This was a better number than the median estimate of 0.5%. On a year-on-year basis, the index rose from 9.9% to 10%. This means that the average home price in the UK has jumped by more than 23,000 pounds since the pandemic started.
UK home prices have risen because of the overall low-interest rates in the UK and government incentives to encourage homeownership. Also, there has been a shortage of homes.
Additional data from the UK revealed that the manufacturing sector did well in November. According to Markit, the manufacturing PMI rose to 58.1 in November. A PMI reading of 50 and above is usually a positive sign. Therefore, there is a possibility that the Bank of England (BOE) will turn hawkish in this month’s rate decision.
Meanwhile, in the United States, the ISM and ADP published strong numbers. According to the Institute of Supply Management (ISM), the country’s manufacturing PMI rose from 60.8 to 61.1. A separate report by Markit placed the figure at 53.3.
The labor market is tightening. According to ADP, the US private sector added 534k jobs in November. This was better reading than the previous 570k. These numbers came two days ahead of the official NFP data.
The GBP/USD declined sharply on Tuesday after the hawkish statement by the Federal Reserve chair. This situation changed as the market reflected on the impact of quicker tapering. The pair is now trading at 1.3318, which is slightly higher than this week’s low of 1.3200.
On the four-hour chart, the pair is trading along the 25-day and 50-day moving averages. It has also moved slightly below the important resistance at 1.3400, which was the lowest level on September 29th.
Therefore, the pair will likely keep rising as bulls target the 38.2% Fibonacci retracement level at 1.3470.