Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2540.
- Add a stop-loss at 1.2625.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.2575 and a take-profit at 1.2635.
- Add a stop-loss at 1.2500.
The GBP/USD exchange rate stabilized after a series of mixed economic data from the UK and after statements by Federal Reserve officials. The pair rebounded from this week’s low to a high of 1.2570.
Jerome Powell's statement ahead
The GBP/USD pair rebounded after the UK published mixed economic numbers. In a report, the British Retail Consortium (BRC) said that the shop price index rose by 1.3% in March after rising by 2.5% in the previous month. This reading was lower than the median estimate of 2.2%.
The report signals that British inflation is falling. Data released last month revealed that the country’s inflation retreated to 3.4% in February down from the pandemic high of 11.1%. The core CPI retreated from 5.1% to 4.5%.
Another report by Nationwide showed that the house price index (HPI) retreated by 0.2% in March after rising by 0.7% in February. It increased by 1.6% on a YoY basis after growing by 1.2% in the previous month. It was the first monthly decline since August.
Meanwhile, a report by the Bank of England (BoE) revealed that net lending to individuals rose by £2.88 billion in February. Mortgage lending rose by £1.51 billion, which is a sign that the economy is doing relatively well.
S&P Global, on the other hand, said that the manufacturing PMI rose to 50.3 in March from February’s 47.5. That increase was higher than the median estimate of 49.9. It was the first time that it expanded since 2022.
The GBP/USD pair rose after the dovish statement by Mary Daly and Loretta Mester. The two officials noted that the Fed would deliver two or three rate cuts in the second half of the year.
Looking ahead, the pair will react to the upcoming statement by Jerome Powell, the Federal Reserve chair. The other important news will be the upcoming US ISM non-manufacturing PMI numbers and the trend in the oil markets.
GBP/USD technical analysis
The GBP/USD pair has been in a strong bearish trend in the past few weeks. This retreat started after the pair peaked at 1.2895 in March. It moved to a low of 1.2540 on Monday as it crashed below the crucial support at 1.2575.
The pair has moved below the 50-period moving average, which is a sign that bears are in control. It has also formed a break-and-retest pattern by moving back to 1.2575. This pattern is a sign of a bearish continuation.
Therefore, the GBP/USD pair will likely resume the downward trend as sellers target this week’s low of 1.2540.
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