GBP/USD Forex Signal: Bulls in Control Ahead of Autumn Statement

The pair will next catalyst for the GBP/USD pair will be the upcoming autumn statement by Jeremy Hunt.

Bullish view

  • Buy the GBP/USD pair and set a take-profit at 1.2220.
  • Add a stop-loss at 1.1750.
  • Timeline: 1-2 days.

Bearish view

  • Set a sell-stop at 1.1800 and a take-profit at 1.1700.
  • Add a stop-loss at 1.1900.

The GBP/USD price moved upwards after the latest American retail sales and UK consumer and producer inflation data. It was trading at 1.1900 on Thursday morning, which was slightly below this week’s high of 1.2027.

UK autumn statement

The American and UK’s inflation has started to diverge. Data published last week showed that US inflation dropped from 8.3% in September to 7.7% in October. This decline was much deeper than what most analysts were expecting.

The situation was different in the United Kingdom. Data published by the Office of National Statistics (ONS) revealed that the headline CPI rose from 10.1% to 11.1% in October. That increase was higher than the median estimate of 10.7%. On a MoM basis, inflation rose from 0.5% to 2.0%.

Meanwhile, core inflation rose from 0.6% to 0.7% on a MoM basis and by 6.5% on a YoY basis. The annualized rate was higher than the median estimate of 6.4%. Further data showed that the producer price index (PPI) input and output rose by 19.2% and 14.8%, respectively.

The ONS attributed the soaring inflation to a surge in gas, electricity, and food prices. The government has already capped gas and electricity bills at 2,500 pounds for a household. Without the stimulus, inflation would have been much higher.

Therefore, the GBP/USD price held steady as investors waited for a more hawkish Bank of England (BoE). The bank has already delivered rate hikes in all meetings since December last year. On the other hand, with America’s inflation easing, analysts expect that the Fed will start slowing the pace of rate hikes.

The pair will next catalyst for the GBP/USD pair will be the upcoming autumn statement by Jeremy Hunt. In it, he will reiterate the new government’s policies as the UK economy stares at a recession.

GBP/USD forecast

The GBP/USD price held steady ahead of the upcoming autumn statement. It was trading at 1.1900, which was slightly below the highest point this week. The bullish view is being supported by the 25-day and 50-day moving averages. It is also above the important support level at 1.1646, the highest level on October 27. Sterling is also slightly below the first resistance of the standard pivot point.

Therefore, the pair will likely continue rising as buyers target the second resistance point at 1.2220. A drop below the support at 1.1800 will invalidate the bullish view.

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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.

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