Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2650.
- Add a stop-loss at 1.2735.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.2700 and a take-profit at 1.2750.
- Add a stop-loss at 1.2650.
The GBP/USD exchange rate rose slightly as the US dollar index (DXY) retreat continued after the June consumer confidence report. It jumped to a high of 1.2695, which was higher than this month’s low of 1.2622.
US consumer confidence data
The GBP/USD pair rose after the US released mixed consumer confidence and housing data on Tuesday.
In a report, the Conference Board noted that the country’s consumer confidence dropped slightly in June as most of them remained concerned about the future. The confidence was supported by the strong labor market.
According to the board, consumer confidence dropped from 101.3 in May to 100.4 in June. The figure was slightly higher than the median estimate of 100.
Meanwhile, the housing market softened slightly in May. The closely watched house price index dropped from 6.7% in April to 6.3% in May. It rose slightly from 0.1% to 0.2% on a MoM basis.
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These numbers will likely not change the Fed’s view about when interest rate cuts will start. In a statement on Tuesday, Fed’s Michele Bowman noted that the bank was still concerned about the country’s inflation.
As such, the bank will only start to cut interest rates when it sees more evidence that inflation was moving to the Fed’s 2% target. Most analysts believe that the first cut will come out in December.
In the UK, the Bank of England left interest rates unchanged 5.25% and hinted that it will cut them since they have moved to its 2% target.
Looking ahead, there will be no major economic data from the UK on Wednesday. The only one, which will have a minimal impact on the GBP/USD pair will be the US new home sales and building permits data.
GBP/USD technical analysis
The GBP/USD exchange rate drifted upwards after the US consumer confidence data. It rose from last Friday’s low of 1.2622 to a high of 1.2700. On the 4H chart, the pair remains between the first and second lines of the Andrew’s pitchfork tool.
It has also risen above the 38.2% Fibonacci Retracement point and the important resistance level at 1.2680, its lowest swing on May 24th and May 30th. Therefore, the pair will likely remain in this range on Wednesday as traders focus on Friday’s personal consumption expenditure (PCE) data. The key support and resistance levels to watch will be at 1.2650 and 1.2730.
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