Top Forex Brokers
Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2400.
- Add a stop-loss at 1.2250.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2280 and a take-profit at 1.2200.
- Add a stop-loss at 1.2400.
The GBP/USD pair retreated on Tuesday and on Wednesday morning as the recent dollar sell-off took a breather. After peaking at 1.2430 on Monday, it dropped to a low of 1.2290, the lowest level since Friday.
Federal Reserve speakers
The GBP/USD pair dropped as the US dollar index bounced back. The index bounced back to a high of $105.55 after falling to a low of $104.85 on Friday.
There were several important news that moved the pair. A report by the British Retail Consortium (BRC) showed that the country’s retail sector continued doing well in October. Sales jumped by 2.6%, higher than the median estimate of 2.4%.
Another statement by the head of Associated British Foods said that food inflation was falling. The company expects that inflation will be all but gone by Easter of next year. Meanwhile, the Halifax house price index rose by 1.1% in October, higher than the median estimate of 0.2%. This increase translated to a 3.2% YoY decline.
The pair also pulled back after a series of statements by Federal officials. In a statement, Neel Kashkari, the head of the Minneapolis Fed, said that the bank had more work to do to lower inflation. He is still open for another rate hike in the next few months.
Meanwhile, Austan Goolsbee, the head of the Chicago Fed said that the Fed had made significant inroads in bringing inflation at 2.0%. He expects that prices will continue falling in the coming months.
The next important catalyst for the GBP/USD pair will be statements by Andrew Bailey and Jerome Powell. The two decided to leave interest rates unchanged last week. Powell’s statement will be the first one after the US published weak Non-Farm Payrolls (NFP) data.
GBP/USD technical analysis
The GBP/USD exchange rate has drifted downwards in the past two days. It has moved below the important support level at 1.2337, the highest point on October 11th. The pair has also dropped below the Woodie pivot point. Also, the Relative Strength Index (RSI) has moved to the neutral level of 50.
The pair has moved above the 50-period Exponential Moving Average (EMA) and the first support of the Woodie pivot point. Therefore, the pair will likely bounce back as traders target the key resistance point at 1.2400.
Ready to trade our free daily Forex trading signals? We’ve shortlisted the best UK forex broker in the industry for you.