Bearish view
- Sell the GBP/USD pair and set a stop-loss at 1.2465.
- Add a stop-loss at 1.2685.
- Timeline: 1-3 days.
Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2685.
- Add a stop-loss at 1.2467.
The GBP/USD price remained in a tight range on Monday because of the UK’s bank holiday. The pair was trading at 1.2600 on Tuesday, where it has been at since Tuesday. This price is significantly lower than this month’s high of 1.2819 and the year-to-date high of 1.3137.
US consumer confidence data
The British pound was relatively unchanged against the US dollar ahead of the important economic numbers from the United States. These numbers will come a few days after the Federal Reserve chair talked at the Jackson Hole Summit in the US.
In his speech, Jerome Powell warned that inflation remained significantly higher than its target point of 2.0%. As a result, there is the lingering challenge that the bank could deliver another rate hike in September.
The market, using the futures market now expects that the bank will leave rates unchanged in September followed by a 0.25% increase in October. Participants believe that the bank will start slashing them in 2024.
The upcoming economic numbers will help to set the tone for what the Fed will do. Later on Tuesday, the Conference Board will publish the latest consumer confidence data. Economists expect the data to show that consumer confidence dropped slightly to 116 in August from the previous 117.
Consumer confidence is important data that the Federal Reserve focuses on since spending is the biggest part of the economy. A highly confident consumer tends to spend more, leading to more economic growth.
The GBP/USD will also react mildly to the US house price index (HPI) and the latest JOLTs jobs numbers. The two figures are expected to show that the labor and housing market are still strong despite the soaring interest rates. Further, the US will release the latest non-farm payrolls (NFP) and PCE data on Friday.
GBP/USD technical analysis
The daily chart shows that the GBP/USD pair peaked at 1.3137 on July 14th. It has now retreated and settled at the lowest level since June. Notably, the 25-day and 50-day moving averages have formed a bearish crossover while the MACD has dropped below the neutral point.
Therefore, the pair will likely continue falling as sellers target the next psychological level at 1.2467, the highest point in December and January.
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