Bearish View
- Set a sell-stop at 1.3045 and a take-profit at 1.2955.
- Add a stop-loss at 1.3145.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.3120 and a take-profit at 1.3200..
- Add a stop-loss at 1.2950.
The GBP/USD moved sideways on Monday morning as the Easter weekend continued. The pair is trading at 1.3057, where it closed at last week. This price is about 0.90% below the highest level this month.
UK Economic Growth
The Office of National Statistics (ONS) published important economic data that signaled that the UK economy was going through a stagflation. Stagflation is defined as a situation where a country’s economic growth is slowing while inflation is at elevated levels.
Data published on Monday revealed that the country’s economy had a modest recovery in February. It expanded by 0.1% after expanding by 0.8% in the previous month.
Additional data showed that the labor market remained strong as the unemployment rate declined to 3.8%. However, inflation remained at elevated levels as the cost of energy and food rose. Indeed, recent data suggests that the price of petrol and gas has risen sharply in the past few months.
Meanwhile, retail sales have also declined, partly because of the ongoing surge in inflation. Therefore, there are concerns that the Bank of England (BOE) will slow its tightening process in the coming months.
The GBP/USD pair also remained under pressure because of the strong US dollar. The dollar index, which measures the performance of the greenback against a basket of currencies, rose above the $100 resistance level for the first time in months. It is currently at $100.30, signaling that investors believe that the Fed will be more hawkish.
The pair will be muted on Monday because of the ongoing Easter weekend holiday. Therefore, there will likely be no major movements. Later this week, focus will be on the ongoing crisis in Ukraine and US housing economic data.
GBP/USD Forecast
The GBP/USD pair has formed a descending triangle pattern that is shown in black. Such a triangle is usually a bearish sign. It has also moved slightly below the 25-day moving average while the MACD has formed a small bearish crossover pattern. The pair is also at the standard pivot.
Therefore, there is a likelihood that the pair will remain in this range today and then resume the downward trend. If this happens, the next key support to watch will be at 1.2950, which is along the first support of the standard pivot point.
