Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2560.
- Add a stop-loss at 1.2415.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2450 and a take-profit at 1.2400.
- Add a stop-loss at 1.2545.
The GBP/USD price continued its retreat as traders reacted to the UK autumn statement by Jeremy Hunt. The exchange rate retreated to a low of 1.2450, lower than this week’s high of 1.2560.
UK autumn statement
Jeremy Hunt, the British chancellor, delivered his closely watched autumn statement in which he presented an optimistic view of the economy. In his speech, he announced several initiatives that will help to supercharge the economy.
On taxation, Hunt decided to slash national insurance taxes by 2%, a move that will be worth over 10.4 billion pounds by 2027. He also announced measures to boost labor participation by reforming the welfare state.
At the same time, the government revised its economic growth estimates. It expects that the economy will grow by 0.7% in 2024, lower than the 1.8% it estimated in May. Inflation is also expected to remain higher for longer.
The GBP/USD pair also retreated after the weak UK durable goods orders. The headline durable goods figure dropped by 5.4% in October after rising by 4.0% in the previous month. Core durable goods orders were flat during the month. These numbers show that the American economy is showing signs of slowing down.
The GBP/USD pair will likely be muted on Thursday since America’s markets will be closed for the Thanksgiving holiday. The only data to watch will be the flash manufacturing and services PMI numbers from the UK.
Economists polled by Reuters expect the country’s manufacturing PMI rose to 45 in November from 44.8 in the previous month. They also see the services PMI remaining at 49.5 and the composite PMI staying at 48.7. A PMI reading of less than 50 is a sign that the key sectors are not doing well.
GBP/USD technical analysis
The GBP/USD pair formed a double-bottom pattern at 1.2065 in October. In technical analysis, this pattern is one of the most bullish signs. It has now moved above the neckline of this pattern at 1.2340, the highest swing on October 11th.
The pair has also dropped slightly from the upper side of the ascending channel. It also remains above the 50-period and 25-period moving averages, signaling that bulls are still in control.
Therefore, sterling will likely remain in this range on Thursday because of the Thanksgiving holiday. In the medium term, the bullish view will remain as long as the pair is above the 50-period moving average. If this happens, the initial target to watch will be this month’s high of 1.2558.
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