Bearish view
- Set a sell-stop at 1.2380 and a take-profit at 1.2280.
- Add a stop-loss at 1.2485.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.2480 and a take-profit at 1.2600.
- Add a stop-loss at 1.2375.
The GBP/USD exchange rate bounced back after the strong jobs numbers from the United Kingdom. The pair jumped above the key resistance point at 1.2452, the highest point since April 14. It has jumped by more than 5.2% from the lowest point in March.
More UK rate hikes
The GBP/USD pair drifted upwards after the strong UK jobs numbers. According to the Office of National Statistics (ONS), wages in the private sector rose by 6.9% in the three months to February of this year. Average earnings with bonuses increased by 5.9%, which was better than the median estimate of 5.1%.
The UK unemployment rate rose slightly to 3.8%. These numbers mean that the rising cost of living is pushing more people to the labor market. Therefore, there is a likelihood that the Bank of England (BoE) will continue hiking interest rates in the coming months.
The next key catalyst for the GBP/USD for pair will be the upcoming consumer and producer inflation data. Economists expect the data to show that the headline CPI dropped from 1.1% to 0.5% in March. On a YoY basis, analysts expect that inflation fell to 9.8%.
Expectations are that core inflation, which excludes the volatile food and energies, declined to 6.0% and 0.6% on a YoY and MoM basis. If analysts are accurate, these numbers will mean that the BoE will continue hiking rates barring any major financial crisis.
There will be no major economic data from the US on Wednesday. The only data to watch will be the upcoming mortgage numbers. However, these numbers will not have a major impact on the pair.
GBP/USD technical analysis
The GBP/USD pair has been in a strong upward trend in the past few months, which saw it jump to a multi-month high of 1.2538. On the 4H chart, the pair has formed what looks like a double-top pattern at 1.2520, which is usually a bearish sign. The pair has retested the key resistance at 1.2446 (January 23rd high).
The GBP/USD price is trading at the 50-period exponential moving average. On Tuesday, the pair rose after hitting the support at 1.2346. Therefore, the outlook is neutral for now. A move below the support at 1.2346 will signal that bears have prevailed, which will see it drop to the 38.2% retracement point at 1.2254.
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