Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3600.
- Add a stop-loss at 1.3250.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3250.
- Add a stop-loss at 1.3600.
The GBP/USD exchange rate remained in a tight range after the US published the latest jobs and inflation report and after the Bank of England (BoE) interest rate decision. It was trading at 1.3376, a few points below this month’s high of 1.3460.
Bank of England Decision and US Macro Data
The GBP/USD exchange rate remained in a narrow range after the US released the October and November jobs numbers. The report showed that the economy lost jobs in October as many government employees left the labor market. It then added 64,000 jobs numbers in November, while the unemployment rate rose to 4.6% during the month.
Another report showed that the headline Consumer Price Index (CPI) declined sharply in November, with the headline figure falling to 2.6% and the core figure moved to 2.7%. These numbers mean that inflation may continue falling in the near term as crude oil prices dropped below $60.
The GBP/USD exchange rate remained in a tight range after the Bank of England slashed interest rates by 0.25%, citing the weakness of the economy and the improving inflation figures. In his statement, Governor Andrew Bailey predicted that inflation will move closer to the 2% target in April.
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The bank hinted that it will continue cutting interest rates gradually, continuing a process that has been ongoing in the past few months.
The pair will remain on edge in the coming weeks as many traders remain in holiday mode. Looking ahead, the next key catalyst to watch will be the UK GDP report on Monday. The US GDP report will come out on Tuesday, while the Conference Board will publish that latest US consumer confidence report.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD exchange rate peaked at 1.3460 on December 16 this year and then pulled back after the major macro events last week.
It has remained above the 50-day and 100-day Exponential Moving Averages (EMA) and the Supertrend indicator. The Relative Strength Index (RSI) has continued rising and is nearing the overbought level.
Therefore, the pair will likely remain in this range this week. A move above the key resistance 1.3460 will point to more gains, potentially to the psychological level at 1.3600. On the other hand, a drop below the key support level at 1.3300 will invalidate the bullish outlook.
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