Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3535.
- Add a stop-loss at 1.3400.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3400.
- Add a stop-loss at 1.3535.
The GBP/USD exchange rate pulled back on the last trading day of the year as the recent bull run faded. It also pulled back after the Federal Reserve published minutes of the last meeting. It dropped to 1.3450, down from this month’s high of 13535.
Top Regulated Brokers
The GBP/USD pair pulled back after the Federal Reserve released minutes of the last meeting in which officials decided to cut interest rates by 0.25%, bringing the official rate to between 3.50% and 3.75%.
The accompanying dot plot pointed to one more interest rate cut in the new year as some officials remained concerned about the elevated inflation in the country. Two officials - Austan Goolsbee and Jeff Schmid - voted to leave interest rates unchanged.
Still, the meeting came before the US published important macro numbers that may push some officials to change their mind in the coming meeting. A report released after the Fed meeting showed that the headline and core Consumer Price Index (CPI) dropped sharply in November.
Another report showed that the economy expanded at a faster pace than expected. It expanded by 4.3% in the last quarter, a trend that may continue in the coming quarters as the impact of Donald Trump's tariffs normalizes.
The GBP/USD exchange rate also retreated after the US released the latest housing data. This report showed that the house price index rose by 1.3% in October, down slightly from the previous 1.4%. The house price index rose by 1.7%, a sign that prices are going up modestly as mortgage rates retreat.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD exchange rate pulled back after hitting the key resistance level at 1.3535. It retreated to a low of 1.3450, its lowest level since December 22nd.
Technicals suggest that the ongoing pullback will likely be brief as the pair remains above the 50-day Exponential Moving Average (EMA). Also, the MACD indicator remains above the zero line, while the pair is along the ascending channel that links the lower highs and higher highs.
Therefore, the most likely scenario is where the pair resumes the uptrend as long as it is above the 50-day moving average and inside the channel. A move below these levels will confirm the reversal and point to more downside.
More GBP/USD gains will be confirmed if the pair moves above the key resistance level at 1.3535. Such a move will point to more upside, potentially to the psychological level at 1.3600.
Ready to trade our free trading signals? We’ve made a list of the best UK forex brokers worth using.