Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3500.
- Add a stop-loss at 1.3200.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit 1.3200.
- Add a stop-loss at 1.3500.
The GBP/USD pair rose above a key resistance level and reached its highest point since March 25. It rose to a high of 1.3390 from the year-to-date low of 1.3150.
US Dollar Retreats as Geopolitical Risks Fade
The GBP/USD pair has continued rising in the past few days as geopolitical risks eased during the overnight session. In a long post, Trump changed his tune on attacking Iran’s critical infrastructure after mediation from countries like Pakistan and Egypt.
He said that the US will reach a two-week ceasefire with Iran as long as it reopens the Strait of Hormuz, where 20% of global crude oil passes.
As a result, crude oil prices continued falling, with Brent and the West Texas Intermediate falling by over 4% on Wednesday. Iran had earlier withdrawn from any talks with the US after Trump threatened to execute and kill an entire civilization.
Iran had threatened to retaliate against such attacks by bombing targets in the Middle East, including key infrastructure, including oil fields and bridges.
The GBP/USD pair will next react to the upcoming Federal Reserve interest rate minutes, which will provide more information on the last meeting. The bank decided to leave interest rates unchanged to between 3.50% and 3.75%.
After that, the bank will react to the upcoming US GDP report, which will show that the economy cooled down in the last quarter of the year. The estimate is that the economy grew by just 0.7% in Q4 after growing by 4.4% in the previous quarter.
The US will release the March consumer inflation report on Friday. Economists see the data showing that the headline Consumer Price Index rose to 3.4% in March from the previous 2.4%. Economists expect the inflation will continue rising as crude oil and natural gas soars.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD pair has rebounded in the past few days. It has risen from a low of 1.3151 on March 30 to a high of 1.3396.
The pair has moved above the upper side of the descending channel and is nearing the Strong, Pivot, Reverse level of the Murrey Math Lines tool. It has also moved above the 50-day Exponential Moving Average (EMA). The Relative Strength Index has moved above the neutral point at 50.
Therefore, the pair will likely continue rising as bulls target the psychological level at 1.3500.