Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2630.
- Add a stop-loss at 1.2800.- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.2740 and a take-profit at 1.2840.
- Add a stop-loss at 1.2650.
The GBP/USD pair remained in a consolidation mode as traders assessed the next actions by the Federal Reserve. It also wavered ahead of key economic numbers from the UK. The pair remained unchanged at 1.2730, where it has been stuck at in the past few days.
UK economic numbers ahead
The GBP/USD pair reacted mildly to a positive UK housing report by Rightmove. The report showed that the average asking price of a house in the UK jumped by 1.35 in December to over 359k pounds. At the same time, December recorded 9 of its 10 days, signaling that there is strong demand.
These numbers came two weeks after Nationwide and Halifax said that house prices jumped for three straight months. This is a major thing that shows the resilience of the British economy even as interest rates remains at their highest levels in years.
UK house price retreat happened as mortgage rates dropped in expectation that the Bank of England (BoE) will start to cut rates in the coming months.
The GBP/USD price will next react to the upcoming UK jobs numbers. Like the housing report, analysts expect the data to reveal that the job market is still strong. The unemployment rate is expected to come in at 4.3% while average earnings rose by 6.8% in November.
The labor report will be followed by the December inflation data scheduled for Wednesday. Economists believe that inflation remained above 2% in December as energy prices rose. Still, analysts at ING see inflation coming to 1.5% by May this year. A sharp decline of inflation will likely lead to faster rate cuts by the BoE.
The pair will also react to a statement by Andrew Bailey, the head of the BoE. His statement on the state of the UK could have an impact on the British pound.
GBP/USD technical analysis
The GBP/USD exchange rate remained in a tight range on Tuesday morning ahead of key UK economic numbers. It is consolidating at the 50-period moving average while the Relative Strength Index (RSI) has crossed the neutral point. The pair has also retreated below the Woodie pivot point.
It has also formed a rising wedge pattern, which is a popular bearish sign. Therefore, the pair will likely have a bearish breakout as sellers target the second support at 1.2628. The stop-loss of this trade is at 1.2825.
Ready to trade our free daily Forex trading signals? We’ve shortlisted the best UK forex broker in the industry for you.