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GBP/USD Forex Signal: Forms Bullish Patterns Ahead of Key Events

Bullish view

  • Buy the GBP/USD pair and set a take-profit at 1.2900.
  • Add a stop-loss at 1.2700.
  • Timeline: 1-2 days.

Bearish view

  • Set a sell-stop at 1.2800 and a take-profit at 1.2700.
  • Add a stop-loss at 1.2900.

GBP/USD Signal Today - 08/07: Bullish Patterns Form (Chart)

The GBP/USD exchange rate continued rising as investors reflected to last week’s election in the UK and the mixed US nonfarm payroll (NFP) data. The pair rose to a high of 1.2818, its highest point since June 12th.

UK GDP and US inflation data ahead

The GBP/USD pair rose in line with the broader US dollar index sell-off after a series of weak economic data. The ISM manufacturing and non-manufacturing PMI numbers moved below 50 in June, signalling that the economy was softening.

Another report released on Friday painted a different picture about the labor market. The economy added over 203k jobs in June while the unemployment rate rose to 4.1%, its highest point since 2022.

These numbers raised the possibility that the Federal Reserve will start cutting interest rates earlier than expected if inflation continues falling. Analysts expect the bank to slash rates in its September.

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    The GBP/USD pair also rose after last week’s UK election in which the Labour Party had the biggest win in decades. Therefore, traders are assessing the impact of Keir Starmer’s policies on the UK economy.

    Looking ahead, there will be several important events to watch this week. The UK will publish the latest GDP estimate on Thursday, providing more information about the health of the UK economy.

    Several Bank of England (BoE) officials will talk and provide their views about the next interest rate decision on August 1st. Analysts expect the bank to start cutting rates in this meeting since inflation has fallen.

    The other important GBP/USD news will be a statement by Jerome Powell, the Federal Reserve chair and the US inflation data set for Thursday. These numbers will provide more data on whether the country’s inflation is falling.

    GBP/USD technical analysis

    The GBP/USD exchange rate continued rising, reaching a high of 1.2815 on Monday. On the daily chart, the pair has remained above the 50-day and 25-day Exponential Moving Averages (EMA).

    It has also formed an inverse head and shoulders pattern and is nearing its neckline at 1.2865. Also, the pair has moved above the 61.8% Fibonacci Retracement point while the Relative Strength Index (RSI) is nearing the overbought level.

    Therefore, the pair will likely continue rising as buyers target the key resistance point at 1.2900, which coincides with the 78.6% retracement point.

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    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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