Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2300.
- Add a stop-loss at 1.2540.
- Timeline: 1 day.
Bullish view
- Set a buy-stop at 1.2485 and a take-profit at 1.2550.
- Add a stop-loss at 1.2325.
The GBP/USD forex pair was a bit choppy as the light economic calendar week continued. The pair was trading at 1.2436, where it has been throughout this week. This price is a few points above last month’s low of 1.2302 and is lower than last Friday’s high of 1.2543.
UK house prices retreated
The British pound has remained flat this week mostly because there have been no major market-moving events this week. Perhaps, the most notable one was the housing data by Halifax. In a report, the company said that the country’s house prices dropped in May.
Prices dropped by 1% on a year-on-year basis, the first decline in years. On a month-on-month basis, prices remained unchanged at 0.0% in line with expectations. These numbers confirmed what another report by Nationwide showed.
These prices are dropping because of the rising mortgage rates and the ongoing cost of living crisis. Data published last month revealed that the country’s consumer price index (CPI) remained above 8% in April this year.
The other important data on Wednesday showed that America’s exports dropped while imports jumped in April. Imports jumped to $323 billion while exports rose to $249 billion. As a result, the trade deficit jumped to over $74 billion during the month. These numbers show that the American economy is slowing.
Looking ahead, the GBP/USD pair will likely have another choppy day since there will be no major data from the US and the UK. The most important data to watch will be the US initial and continuing jobless claims numbers. Initial claims have moved sideways in the past few weeks as the labor market continues to strengthen.
GBP/USD technical analysis
The GBP/USD pair peaked at 1.2538 on Friday last week and then plunged to 1.2373 after the strong non-farm payrolls (NFP) data. On the 4H chart, the pair is trading at the lower side of the Andrews Pitchfork tool. It is also consolidating at the 50-period moving average while the width of the Bollinger Bands has narrowed. The Awesome Oscillator has moved to the neutral point.
Therefore, the pair will likely remain in this range on Wednesday. A bearish view will be confirmed if the price moves below the lower line of the pitchfork tool. If this happens, the next level to watch will be at 1.2300. More bullish moves will be confirmed if it moves above 1.2538.
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