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GBP/USD Forex Signal: Brief Rebound Likely as it Sits Above Key Resistance

The key GBP/USD news to watch will be the upcoming consumer confidence data from the US. 

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    Bullish view

    • Buy the GBP/USD pair and set a take-profit at 1.2915.
    • Add a stop-loss at 1.2775.
    • Timeline: 1 day.

    Bearish view

    • Set a sell-stop at 1.2790 and a take-profit at 1.2700.
    • Add a stop-loss at 1.2900.

    The GBP/USD exchange rate continued falling after a series of weak manufacturing and services numbers from the UK and the US. The pair retreated to a low of 1.2797, the lowest point since July 10th. It has retreated by over 2.3 percent from its highest point this month.

    UK economy is slowing

    Recent economic numbers showed that the UK’s economy is slowing as the cost of living crisis escalates. Data published last week showed that the country’s inflation dropped to 7.9% in June as demand waned.

    Additional numbers released on Monday showed that economic output deteriorated in July. The manufacturing PMI figure retreated to 46.5 in July, the lowest level in five months. Most of the surveyed manufacturers said that their business activity was contracting.

    The services sector also dropped to 51.3 in July. In a note, S&P Global said that business activity in the country was stalling as interest rates remained high. The Bank of England (BoE) moved interest rates from zero to a 15-year high of 5%. And analysts expect that the bank will hike rates again by 0.25% this month.

    Meanwhile, PMI numbers from the US showed that the manufacturing sector improved but remained below the expansion zone of 49. The services PMI dropped to 52.4, lower than the median estimate of 54.

    The key GBP/USD news to watch will be the upcoming consumer confidence data from the US. Economists expect the data to show that confidence rose from 109.7 in May to 111.5 in June. This is an important figure because consumer spending is the biggest constitute of the economy.

    The US will also publish the laatst house price index (HPI) data. These numbers will come a day ahead of the upcoming Fed interest rate decision.

    GBP/USD forecast

    The GBP/USD exchange rate continued falling as traders focused on the latest flash manufacturing and services PMI numbers. It dropped below the important support level at 1.2845, the highest point on June 16th. Most importantly, the pair retested the ascending trendline shown in black. This line connects the lowest levels since May 25.

    The GBP/USD pair dropped below the 50-period moving average while the Relative Strength Index (RSI) is hovering near the oversold level. Therefore, the pair will likely bounce back unless bears prevail to move below the ascending trendline. The rebound will see it retest the resistance point at 1.2917.

    GBP/USDReady to trade our free trading signals? We’ve made a list of the best UK forex brokers worth using.

    Crispus Nyaga
    About 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,, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

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