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GBP/USD Forex Signal: Ripe for a Bullish Breakout to 1.2770

Bullish view

  • Buy the GBP/USD pair and set a take-profit at 1.2770.
  • Add a stop-loss at 1.2650.
  • Timeline: 1-2 days.

Bearish view

  • Set a sell-stop at 1.2700 and a take-profit at 1.2650.
  • Add a stop-loss at 1.2750.

GBP/USD Signal Today - 21/05: Bullish to 1.2770 (Chart)

The GBP/USD exchange rate was stuck at a crucial resistance level as the recent bull run faded. It was trading at the psychologically-important point at 1.2700, its highest point since April 10th.

UK inflation data ahead

There was little action on the sterling and the US dollar on Monday since there was no important data from the US and the UK. The ‘data drought’ allowed traders to reflect on last week’s economic numbers.

Key leading indicators like retail sales, manufacturing and industrial production, and housing numbers were weaker than expected. These numbers signalled that the economy was not growing.

Alarmingly, the data came a few weeks after a separate data revealed that the economy expanded by just 1.6% in Q1 after growing by 3.4% in Q4. That growth was significantly weaker than expected.

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    Therefore, market participants expect that the Federal Reserve will likely deliver at least two rate cuts later this year. Besides, there are signs that inflation has started to move in the right direction.

    There will be no economic data from the UK and the US on Tuesday. The key potential catalyst will be statements from key Federal Reserve officials like Christopher Waller and Raphael Bostic. They will use their statements to provide a feedback on last week’s data.

    Andrew Bailey, the head of the Bank of England (BoE) will also deliver a statement. This will be a crucial one since it will come after the UK published strong jobs and GDP numbers recently.

    The UK will also publish April’s inflation report, which will shed light on price movements. Economists expect the report to show that the headline CPI slipped to 2.1% in April as energy prices crashed.

    If this figure is correct, it means that the bank is winning the inflation battle, which will see it start cutting rates in June.

    GBP/USD technical analysis

    The GBP/USD has been in a strong uptrend after bottoming at 1.2298 in April. It formed an inverse head and shoulders pattern, a popular bullish sign. It has also invalidated the double-top pattern at 1.2635, which is a common bearish signal.

    The pair has moved above the 50-period moving average and is now trading at 1.2700, its highest swing on April 10th. Therefore, the pair’s outlook is bullish, with the next level to watch being at 1.2771, its highest swing in January and February 2024.

    Ready to trade our free trading signals? We’ve made a list of the best UK forex brokers worth using. 

    Crispus Nyaga
    About Crispus Nyaga
    Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.
     

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