Bearish View
- Sell the GBP/USD pair and set a take-profit at 1.3150.
- Add a stop-loss at 1.3280.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.3275 and a take-profit at 1.3350.
- Add a stop-loss at 1.3200.
The GBP/USD pair has been in a strong bearish trend in the past few days as investors focus on the rising risks and the likelihood that the Federal Reserve will embrace a more hawkish tone. The pair is trading at 1.3237, which is the lowest it has been since December last year.
US Jobs Data
The GBP/USD pair declined as investors rushed to the safety of the US dollar as the ongoing crisis in Ukraine continued. In the past few days, fighting has continued in key Ukrainian cities and villages, leading to worries of an escalating war.
The UK and the US have announced significant sanctions, which are meant to punish Russians and make Putin pay for his attack. Still, there are risks that the sanctions and the rising tensions will affect the UK economy because of the rising prices of crude oil and natural gas.
On Friday, the US published strong jobs data. According to the Bureau of Labor Statistics, the economy added more than 600k jobs in February as the economic recovery continued. This increase was better than what analysts were expecting. It was also better than the estimate by ADP and the previous reading.
Other numbers showed that the labor market is doing well. For example, the unemployment rate dropped to 3.8%, which was the lowest level since the pandemic started. The labor participation rate also did well. The only concern was that wages have started to drop as wage growth slowed from 5.5% to 5.1%.
Still, these numbers reinforce what the Federal Reserve said last wek. In his testimony in congress, Jerome Powell said that the bank will start tightening in the next meeting. Therefore, with inflation still rising, there is a likelihood that the bank will deliver a 50 basis point hike.
GBP/USD Forecast
The four-hour chart shows that the GBP/USD pair has been in a strong bearish trend in the past few days. It has fallen by more than 3.75% from its highest level this year. The decline continued after the pair moved below the key support level at 1.3275, which was the lowest level this year.
It has also moved below the 25-day and 50-day moving averages while the RSI is approaching the oversold level. Therefore, there is a likelihood that the pair will continue falling this week. If this happens, the next key level to watch will be at 1.3150.
