Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3100.
- Add a stop-loss at 1.2800.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2840 and a take-profit at 1.2750.
- Add a stop-loss at 1.3050.
The GBP/USD exchange rate continued its bullish trend after the US published encouraging consumer inflation data. The pair has risen in the past six days and is trading at the highest level since April last year. This rally means that the pair has soared by over 25% from last year’s low.
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UK GDP data
The economic calendar has had several important economic numbers this week. On Tuesday, the Office of National Statistics (ONS) published strong UK jobs numbers. The spotlight was the country’s strong wage data, which is set to put inflation under pressure.
The most important data came out on Wednesday when the US released June’s consumer inflation numbers. The report revealed that American inflation was moderating. According to the Bureau of Labor Statistics (BLS), inflation rose 3% in June, down from the previous 4.1%. It was the lowest inflation figure since March 2021.
Core inflation dropped from 5.3% in May to 4.8% in June. Therefore, there is a likelihood that inflation will continue falling in the coming months since China is staring at deflation. Chinese inflation numbers are important because of the vast goods the country sells to the US.
Looking ahead, the US will publish the latest producer price index (PPI) data on Wednesday. Economists expect that the headline PPI rose by 0.4% YoY in June while core PPI jumped by 2.7%. While these numbers are important, they rarely move the US dollar.
The other important data to watch will be the latest UK GDP numbers. Economists polled by Reuters believe the economy contracted by 0.4% in May after growing by 0.2% in the previous month. The UK will also publish the latest industrial and manufacturing production numbers
GBP/USD forecast
The GBP/USD exchange rate continued rising after the US inflation data. It moved slightly above the ascending trendline that connects the highest point since January. The pair has moved to the upper side of the Bollinger Bands. It has also jumped above the 50-day moving average while the Relative Strength Index (RSI) and the Stochastic Oscillator have moved to the overbought level.
The pair will likely continue rising in the coming days, with the next level to watch being at 1.3100. The stop-loss of this trade is at 1.2800.
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