Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3500.
Add a stop-loss at 1.3250.
Timeline: 1-3 days.
Bearish view
Sell the GBP/USD pair and set a take-profit at 1.3250.
Add a stop-loss at 1.3500.
The GBP/USD exchange rate rose for the third consecutive day as market participants cheered the new ceasefire between the United States and Iran. It also rose after the Federal Reserve released minutes of the last monetary policy meeting. It moved to 1.q high of 1.3480, it's highest level since March 23.
US GDP, PCE, and CPI Data Ahead
The GBP/USD pair rose as traders reacted to the two-week ceasefire between the US and Iran, which paused a war that started in February.
Still, the main risk is that the ceasefire may not hold in the two weeks. For one, it is unclear whether Israel will end its bombing of Lebanon, which Iran notes was part of the ceasefire agreement.
The pair also rose after the Federal Reserve published minutes of the last meeting, in which the Federal Reserve decided to leave interest rates unchanged between 3.50% and 3.75%.
Some Federal Reserve officials warned that the war would lead to a higher inflation and wanted to hike interest rates.
On the other hand, some officials focused on the labor market, which was weakening before the war started. Analysts believe that the bank will still leave rates unchanged in the meeting later this month.
The GBP/USD pair will react to the upcoming US GDP and PCE report later on Thursday. This being the second reading of the GDP, its impact on the pair will be limited.
The other important report will come out on Friday when the US releases the latest consumer inflation report. Economists expect the data to show that the headline Consumer Price Index (CPI) rose to 3.4% in March as energy prices jumped.
On the positive side, the inflation surge may be limited, especially when the Iran war ends, leading to a sharp decline in energy prices.
GBP/USD Technical Analysis
The three-day chart shows that the GBP/USD pair has rebounded after falling to a low of 1.3150 earlier this month. This rebound happened as the pair formed a falling wedge pattern, which is made up two descending and converging trendlines.
A closer look also shows that it has formed an inverted head-and-shoulders, a common bullish reversal sign in technical analysis. It is also being supported by the 200-day Weighted Moving Average.
Therefore, the pair will likely continue rising as bulls target the key resistance level at 1.3500. The alternative is where the pair retreats and retests the upper side of the wedge pattern and then resumes the uptrend.