Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3000.
- Add a stop-loss at 1.3300.
- Timeline: 1-2 days.
Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3300.
- Add a stop-loss at 1.3000.
The GBP/USD exchange rate rose slightly on Wednesday as traders waited for the upcoming Rachel Reeves’ budget speech, in which she will share more details on her tax plan. It was trading at 1.3200, a few points above this month’s low of 1.3012.
Rachel Reeves Budget Speech Ahead
The GBP/USD pair will be in the spotlight today as Reeves, Chancellor of the Exchequer, delivers her budget reading. Forex traders are generally bearish on sterling, with trading volumes in put options being hihgher than calls.
Bets against the sterling have intensified after the country published weak GDP data recently. Also, a report released by the Office of National Statistics (ONS) showed that consumer inflation dropped slightly in October. These numbers have pushed investors to predict that the Bank of England (BoE) will cut interest rates in December.
The GBP/USD pair also reacted to the latest US consumer confidence data. According to the Conference Board, consumer confidence dropped to the lowest level in seven months as concerns about the labor market and the economy. It dropped to 88.7 from the previous 95.5.
Top Forex Brokers
More data showed that the house price index dropped to 1.7% in September from the previous 2.4%. These numbers came as bets that the Federal Reserve will cut interest rates in its December meeting. These odds have jumped to over 80% after dovish statements from some officials like Christopher Waller and Mary Daly.
The next key data to watch on Wednesday will be the upcoming US initial and continuing jobless claims data. Also, the Federal Reserve will publish the Beige Book, which will provide more information about the economy.
GBP/USD Technical Analysis
The daily chart shows that the GBP/USD pair has remained under pressure in the past few days. It has formed a bearish flag pattern, one of the most common continuation sign. It has remained below the 50-day and 25-day moving averages.
The pair remains alongside the 38.2% Fibonacci Retracement level. This price is along the neckline of the double-top pattern. Therefore, the pair will likely have a bearish breakout potentially to the 50% retracement level at 1.2956. A move above the resistance at 1.3300 will invalidate the bearish forecast.
Ready to trade our free trading signals? We’ve made a list of the best UK forex brokers worth using.