The GBP/USD exchange rate continued its recovery on Monday morning and is now trading at the 38.2% Fibonacci Retracement level.
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- Buy the GBP/USD pair and set a take-profit at 1.2505.
- Add a stop-loss at 1.2400.
- Timeline: 1 day.
- Sell the GBP/USD pair and set a take-profit at 1.2375.
- Add a stop-loss at 1.2460.
The GBP/USD pair continued its recovery on Monday after a relatively busy week for the British pound. The pair is hovering near the highest point since September after it jumped by over 3.50% from its lowest point this year.
Jeremy Hunt autumn statement
The British pound had a strong performance last week after mixed economic data from the UK. In a report, the Office of National Statistics (ONS) said that the country’s Consumer Price Index (CPI) dropped sharply in October as energy prices dipped. The headline CPI dropped to 4.6%.
In another report, the statistics agency showed that retail sales dropped to their lowest level since February 2021 as inflation remains stubbornly high. British wages are not growing as fast to cushion consumers. Core sales also dropped sharply in October, sending worries that the UK will sink into a recession.
Looking ahead, the GBP/USD pair will be in the spotlight this week as Chancellor Jeremy Hunt delivers his autumn statement. He has been under pressure from other conservatives to cut taxes in a bid to boost the economy.
In a statement on Sunday, Hunt warned that any tax cuts would likely lead to more inflation. Instead, he said that tax cuts will happen in a gradual phase in a bid to both lower inflation and boost growth.
Jeremy Hunt is expected to deliver some important news. For example, he will likely warn that all welfare recipients who refuse to engage their jobcentre will lose their benefits.
The other important news for the GBP/USD pair will be the upcoming FOMC minutes. These minutes will provide more information about what to expect in the coming meetings. In statements last week, several Fed officials noted that inflation was still stubbornly high. Still, most analysts expect the bank to maintain rates unchanged in its December meeting.
GBP/USD technical analysis
The GBP/USD exchange rate continued its recovery on Monday morning and is now trading at the 38.2% Fibonacci Retracement level. It is also approaching last week’s high of 1.2506. The pair has moved above the 25-day and 50-day moving averages. It is also approaching the upper side of the ascending channel.
It has also formed an inverted head and shoulders pattern. Therefore, the pair will likely continue rising on Monday as traders target last week’s high of 1.2506. The stop-loss of this trade will be at 1.2400.