Bearish view
Top Regulated Brokers
Sell the GBP/USD pair and set a take-profit at 1.3150.
Add a stop-loss at 1.3400.
Timeline: 1-2 days.
Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3400.
Add a stop-loss at 1.3150.
The GBP/USD pair has remained under pressure this week as investors brace for major macro events in the UK and the US. It also retreated after some important macro data from the US, including house prices and consumer confidence. It was trading at 1.3290, much lower than this month’s high of 1.3560.
Federal Reserve and Bank of England Decision
The GBP/USD pair retreated sharply after the US published key macro data. Reports suggest that consumer confidence slipped to 90.8 in July from last month’s 92.2. The figure was lower than the median estimate of 92.4. This retreat happened as gasoline prices jumped amid the US-Iran war.
Another report showed that the House Price Index rose by 0.3% in May, higher than the median estimate of 0.1%. This increase translated to an annual increase from 2.0% to 2.2%.
These numbers came as traders reacted to the July Federal Reserve interest rate decision. Economists expect the bank to maintain interest rates unchanged between 3.50% and 3.75%.
Nonetheless, analysts predict that the bank will deliver a hawkish pause in this meeting. In this, the bank will leave rates intact and point to an interest rate hike later this year as inflation has remained above the 2% target in the last five years.
The next important catalyst after the Federal Reserve decision will be the Bank of England (BoE), which will come out on Thursday. Like the Fed, analysts expect the bank to deliver a forceful pause, with officials hinting at future hikes.
The macro data released last week showed that retail sales jumped in June this year. Another report showed that consumer inflation continued softening in June this year.
GBP/USD Technical Analysis
The daily chart shows that the GBP/USD pair has slumped in the past few days, moving from a high of 1.3558 to the current 1.3287. It has remained below the descending trendline that links the highest swings since January this year.
The pair has moved below the 50-day Exponential Moving Average (EMA). Also, the two lines of the Percentage Price Oscillator (PPO) have formed a bearish crossover pattern.
Therefore, the pair will likely continue falling as sellers target the key support level of 1.3150, its lowest level in June. A move above the 50-day moving average will point to more gains.