Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.1750.
- Add a stop-loss at 1.1400.
- Timeline: 1 day.
Bearish view
- Set a sell-stop at 1.1445 and a take-profit at 1.1350.
- Add a stop-loss at 1.1550.
The GBP/USD price rose slightly after the latest decision by the Federal Reserve. It rose to a high of 1.1540, which was slightly above this week’s low of 1.1450. The pair has risen by more than 2% from its lowest level in October as focus shifts to the upcoming Bank of England (BoE) meeting.
BoE meeting ahead
The Federal Reserve concluded its monetary policy meeting on Wednesday and decided to continue with its rate hikes. In a statement, the Fed decided to hike interest rates by 75 basis points for the fourth straight meeting. It brought interest rates to between 4% and 4.25%, the highest level in decades.
The Fed’s statement was similar to what it has delivered in the past few months. The only change was a statement in which the bank said that it will take into account the “cumulative tightening of monetary policy and the lags in which it affects economic activity and inflation.” Analysts now expect a 0.50% hike in December.
The Fed decision came at a time when the US has published strong economic numbers recently. On Wedneday, data by ADP showed that non-farm employment change rose from 192k in September to 239k in October. The increase was better than the median estimate of 195k.
The GBP/USD pair will next react to the upcoming rate decision by the Bank of England. Economists expect that the bank will hike rates by 0.75% for the first time in 33 years. That view is lower than the recent expectation that the bank would hike by 100 basis points in its attempts to calm the market.
Like the Federal Reserve, the Fed is fighting multiple battles at once. Inflation has surged to more than 10% while the housing sector has started showing cracks. Data published on Tuesday showed that house prices dipped sharply in October as mortgage rates rose.
GBP/USD forecast
The four-hour chart shows that the GBP/USD pair has been in a tight range recently. It has moved slightly above the 50-day exponential moving average (EMA). The pair is also at the standard pivot point and above the ascending trendline shown in blue. The Relative Strength Index (RSI) has moved to the neutral point.
Therefore, the pair will likely resume the bullish trend as buyers target the first resistance of the standard pivot point at 1.1750. The stop-loss of this view will be at 1.1370.
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