The pair will likely keep falling.
Set a sell-stop at 1.3380 and a take-profit at 1.3300.
Add a stop-loss at 1.3450.
Timeline: 1-2 days.
Set a buy-stop at 1.3460 and a take-profit at 1.3550.
Add a stop-loss at 1.3400.
The GBP/USD pair made a bearish breakout after the relatively strong US existing home sales data and after Biden announced his Fed Chair pick. It dropped to a low of 1.3390, which was lower than last week’s high of 1.3515.
Strong US Data
For example, in the US, the unemployment rate has dropped to the lowest level during the pandemic while inflation has risen to the highest level in more than 30 years. Retail sales also surprised as they rose by 1.7% in October.
On Monday, data from the US showed that existing home sales rose from more than 6.29 million in September to more than 6.34 million in October. This was a 0.8% increase.
Similarly, in the UK, data showed that the unemployment rate has dropped, inflation has surged, and retail sales did well as the holiday season started. Therefore, analysts believe that the Fed and Bank of England will continue tightening in the coming months.
The GBP/USD pair declined after Joe Biden reappointed Jerome Powell to become the next Fed Chair. He was competing with Lael Brainard to become the next chair. Lael will now become the bank’s vice-chair. Therefore, analysts expect that the Fed will have continuity. This means that it will continue its gradual tightening process.
The pair will today react to the latest flash manufacturing and services PMI numbers from the US and UK. Analysts expect the data to show that the UK manufacturing and services PMI rose to 56.3 and 54.6, respectively. In the US, they expect the data to show that the two PMIs also remained above 50 in November.
The GBP/USD pair made a bearish breakout on Monday. Before that, the pair was forming a bearish flag pattern, which is usually a bearish sign. The pair also moved below the 25-day and 50-day moving averages.
The MACD managed to move below the middle line of the MACD while the Relative Strength Index (RSI) has also dropped. Therefore, the pair will likely keep falling. This will be confirmed if the pair manages to move below this month’s low at 1.3352.