Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3600.
- Add a stop-loss at 1.3200.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3200.
- Add a stop-loss at 1.3600.
The GBP/USD exchange rate continued its uptrend, reaching its highest point since October 7. It has bounced back by nearly 3% from its lowest point in November, and this uptrend my continue in the coming weeks.
UK and US Macro Data Ahead
The GBP/USD pair continued rising as investors reacted to the final Federal Reserve decision of the year. In it, the bank decided to cut interest rates by 0.5%, bringing the benchmark rate to between 3.50% and 3.75%.
Officials also started quantitative easing policy, by starting to buy short-term governmentt bonds worth $40 billion a month. QE normally boosts the dollar liquidity, putting the pair under pressure over time.
Looking ahead, the Bureau of Labor Statistics (BLS) will publish the upcoming inflation and jobs data this week. Its October report is expected to show that the economy added over 50k jobs, much lower than the 112k it created in September.
The decline will be because of the government shutdown that prevented key agencies from adding new workers. The BLS will also publish the latest consumer inflation report on Friday.
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These numbers will help the Fed determine whether to deliver more cuts in 2025 than predicted. Its guidance was that it will cut rates just once in that meeting.
The other key catalyst for the GBP/USD pair will be the upcoming data from the UK. The Office of National Statistics (ONS) will publish the latest jobs numbers on Tuesday and consumer inflation on the following day.
Economists polled by Reuters expect the report to show that the headline CPI softened from 3.6% in October to 3.5% in November. Core inflation, which excludes the volatile food and energy prices, is expected to remain at 3.4%.
The expectation is that the BoE will decide to cut interest rates by 0.25% in the next meeting even as inflation remains above the 2% target.
GBP/USD Technical Analysis
The daily chart shows that the GBP/USD pair has rebounded in the past few months. It has jumped from a low of 1.300 in November to a high of 1.3435.
The pair has crossed the 50-day moving average and is now nearing the strong pivot reverse level of the Murrey Math Lines tool. It has jumped above the Ichimoku cloud indicator, while the RSI and MACD have all pointed upwards.
Therefore, it will likely continue rising as bulls target the psychological level at 1.3600. A drop below the support at 1.3200 will invalidate the bullish outlook.
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