GBP/USD Forex Signal: Bulls Prevail Amid USD Sell-Off Gains

Crispus Nyaga

The pair will likely continue rising as buyers target the second resistance level at 1.2415.

Bullish View

  • Buy the GBP/USD pair and set a take-profit at 1.2420.
  • Add a stop-loss at 1.2200.
  • Timeline: 1-2 days.

Bearish View

  • Set a sell-stop at 1.2225 and a take-price at 1.2150.
  • Add a stop-loss at 1.2320.

The GBP/USD price continued its bullish trend as investors refocused on the upcoming interest rate decision by the Bank of England (BoE). It also rallied as the US dollar and bond yields continued falling. The pair rose to a high of 1.2295, which was the highest level since June 28th of this year. It has risen by more than 4.22% from the lowest point this year.

US Dollar Sell-Off

The GBP/USD pair continued its bullish trend as the US dollar continued falling. The dollar index has droopped from last week’s high of $109.30 to the current $105.7. This decline is mostly because of the ongoing feeling that the Federal Reserve will not be as hawkish as expected.

Last week, the Fed decided to hike interest rates by 0.75%, bringing the year-to-date increase to 225 basis points. The bank will also continue reducing its balance sheet. At the same time, the committee warned that it will continue hiking interest rates in a bid to fight the soaring inflation.

However, analysts now believe that the Fed will not be as hawkish as expected because of the performance of the economy. Data published last week revealed that new and existing home sales declined sharply in June.

Worse, additional data showed that the country sank to a recession in the second quarter as it contracted by 0.9%. As a result, the yield of the 10-year bond year government bonds dropped to 2.66% while the 30-year fell to 2.90%.

The next key catalyst for the GBP/USD pair will be the upcoming American JOLTs data. Economists expect the data to show that the number of vacancies dropped from 11.25 million in June to 11 million in July.

On the bigger picture, the next key catalyst to watch will be the upcoming Bank of England interest rate decision and the US jobs data.

GBP/USD Forecast

The four-hour chart shows that the GBP/USD pair formed an inverted head and shoulders pattern in July. In price action analysis, this pattern is usually a bullish sign. The pair has managed to move above the 25-day and 50-day moving averages. As the pair rose, it moved to the first resistance of the standard pivot point.

Therefore, the pair will likely continue rising as buyers target the second resistance level at 1.2415. A drop below the support level at 1.2200 will invalidate the bullish view.

GBP/USD

Ready to trade our free daily Forex trading signals? We’ve shortlisted the best Forex trading brokers in the industry for you.

Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.