Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2700.
- Add a stop-loss at 1.2620.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2650 and a take-profit at 1.2600.
- Add a stop-loss at 1.2700.
The GBP/USD exchange rate crashed hard and then pared back some of those losses after the relatively mixed US economic numbers. The pair retreated to a low of 1.2621 and then bounced back to 1.2660 ahead of key US inflation report.
US PCE data ahead
The US published has published slightly mixed economic numbers this month. On Tuesday, the Conference Board said that the country’s consumer confidence dropped sharply in February as most people worried about inflation .
Another report showed that the house price index (HPI) rose by just 1.0% in December, a few points below the previous month’s 1.4%. The headline and core durable goods order numbers tumbled in January.
Meanwhile, on Wednesday, a report by the Bureau of Economic Analysis (BEA) showed that the economy did relatively well in the fourth quarter. It expanded by 3.2%, missing the analysts estimate of 3.3%. Real consumer spending rose by 3.0% while the GDP price index rose by 1.7%.
Top Forex Brokers
The next important economic numbers to watch will be the upcoming US PCE report. Economists expect the data to show that the headline PCE price index rose by 2.4% in January after rising by 2.6% in the previous month.
The core PCE figure, which excludes the volatile food and energy prices, is expected to come in at 2.4%, down from the previous 2.6%. These numbers mean that the country’s inflation is heading in the right direction as it nears the Fed’s target of 2.0%. The US will also publish the latest personal income and spending data.
The other important events from the US will be the latest pending home sales data and the Atlanta Fed GDPNow. This estimate is expected to show that the country’s economy is growing by 3.2% in Q1. Some Fed officials like Austan Goolsbee and Loretta Mester.
GBP/USD technical analysis
The GBP/USD pair retreated to a low of 1.2621 on Wednesday and then rebounded to over 1.2660. It has remained slightly below the 25-period moving average while the Average True Range (ATR) has pointed upwards. The ATR is an important indicator that measures an asset’s volatility.
The pair has also moved to the pivot point of the Woodie pivot point tool. Therefore, the outlook for the exchange rate is neutral, with a bullish bias. If this happens, the next point to watch will be this week’s high of 1.2700.
Ready to trade our free trading signals? We’ve made a list of the best UK forex brokers worth using.