Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2573.
- Add a stop-loss at 1.2685.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.2650 and a take-profit at 1.2700.
- Add a stop-loss at 1.2600.
The GBP/USD pair moved sideways on Monday morning as the market reflected on last Friday’s US jobs report and as they shifted their focus to the upcoming US inflation data and Federal Reserve minutes. The pair was trading at 1.2640, a few points above last Thursday’s low of 1.2573.
US inflation data and Fed minutes
The GBP/USD pair reacted mildly to the March non-farm payrolls (NFP) data. According to the BLS, the economy created 303k jobs in March, signalling that the economy was doing well. The government added 71k jobs while the private nonfarm payrolls increased by 232k.
Meanwhile, the unemployment rate improved to 3.8% in March from the previous 3.9% while the participation rate jumped from 62.5% to 62.7%. The average hourly earnings rose by 4.1%.
Therefore, these numbers, coupled with the rising energy prices, mean that the Fed will find it difficult to cut interest rates in the next few meetings. Brent and West Texas Intermediate (WTI) prices have jumped to $91 and $87, respectively.
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Crude oil is a major contributor to inflation since it has an impact on gasoline prices. Indeed, the average gasoline price has jumped to $3.6 while Californians are paying over $5.5. The prices of key services like rent and insurance has continued rising.
The next important catalysts for the GBP/USD pair will come out on Wednesday when the US publishes the latest inflation data and Fed minutes. Economists believe that the country’s inflation continued rising in March.
The headline CPI is expected to have moved from 3.1% in February to 3.4% in March. Core inflation is expected to be 3.7%, just a drop from the previous 3.8%. If these numbers are correct, it means that the Fed will likely delay its rate cuts.
The Fed will also publish minutes of the last meeting on Wednesday. These minutes will provide more color about the last Fed meeting and what officials deliberated. Last week, Raphael Bostic, one of the Fed
GBP/USD technical analysis
The GBP/USD pair has moved sideways in the past few weeks. It bottomed at 1.2540 on Monday and then bounced back to a high of 1.2683. The pair was trading at 1.2638 on Monday, a few pips above the Woodie pivot point. It has also risen slightly above the 50-period and 25-period moving averages.
The Percentage Price Oscillator (PPO) has moved slightly above the neutral point. Therefore, the pair will likely remain in this range on Monday as traders wait for the US inflation data and Fed minutes.
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