Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2900.
- Add a stop-loss at 1.2600.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2600.
- Add a stop-loss at 1.2900.
The GBP/USD exchange rate continued rising this week, reaching its highest level since December last year. It rose to 1.2740 as odds that the Federal Reserve will intervene to Trump’s tariffs by cutting interest rates. It has jumped by 5.40% from its lowest level in January.
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Odds of Federal Reserve rate cuts rise
The GBP/USD pair continued its strong trajectory this week as market data pointed to more interest rate cuts by the Federal Reserve. For example, American bond yields continued falling, with the ten-year yield falling to 4.176% and the two-year falling to 3.91%.
The two figures have been in a strong downward trend in the past few months, a sign that the market is convinced that the Fed will restart cutting interest rates in the next few months.
These cuts will happen because of Donald Trump’s tariffs, which have led to major volatility in the market. A tracking data by the Atlanta Fed shows that the economy is expected to have a negative growth rate this quarter.
Therefore, the Fed will likely prioritize growth instead of inflation and deliver more cuts than the previous guidance of 2.
The Fed has already slashed interest rates three times since last year as inflation fell. Recently, however, it has maintained a hawkish tone as inflation resumed its uptrend, with the headline Consumer Price Index (CPI) rising to 3.0% in January.
The next GBP/USD news will be the upcoming ADP nonfarm private payrolls data. Economists see the report showing that the private sector added 144k jobs in February. The report will come two days ahead of the upcoming official NFP data.
Further, the pair will react to a statement by Andrew Bailey, the head of the Bank of England (BoE) and Huw Pill, its chief economist.
GBP/USD technical analysis
The GBP/USD pair continued its strong uptrend, reaching its highest level since December 18. It moved above the crucial resistance level at 1.2612, the 38.2% Fibonacci Retracement point and the lowest swing in June last year.
The 50-day and 25-day moving averages have made a bullish crossover pattern. Also, the two lines of the MACD indicator and other oscillators have continued rising this week, a sign that it has momentum.
Therefore, the pair will likely continue rising as bulls target the psychological level at 1.3000. This rally will be confirmed if the pair rises above the 50% retracement point at 1.2800.
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