Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2940.
- Add a stop-loss at 1.2800.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2845 and a take-profit at 1.2785.
- Add a stop-loss at 1.2940.
The GBP/USD exchange rate has stabilized as it ended its recent sell-off. It was trading at 1.2860 on Tuesday morning as traders waited for more cues from the Federal Reserve and the Bank of England.
US Consumer Confidence Report
The US has been in the spotlight in the past few days as it published encouraging GDP and PCE inflation data. In a report on Thursday, the Bureau of Economic Analysis (BEA) said that the economy expanded by 2.6% in Q1.
That economic growth was better than the expected 1.8%. However, as has happened in the past, the bureau could still lower this figure in subsequent numbers in the next two months.
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In another report, the bureau noted that the US PCE retreated in June, confirming that prices were moving in the right direction.
On Tuesday, the US will publish the next consumer confidence report. Economists expect the data to show that the consumer confidence dropped from 100.4 in June to 99.8 in July.
Another report is expected to show that the number of job openings dropped from 8.14 million in June to 8.03 million in June.
These numbers will come a day ahead of the upcoming Federal Reserve interest rate decision. Economists expect the Fed will decide to leave interest rates unchanged between 5.25% and 5.50%. It will also point to a rate cut later in September.
The GBP/USD exchange rate will also react to the upcoming Bank of England (BoE) decision. Unlike the Fed, the bank is expected to cut interest rates by 0.25% in this meeting since the country’s inflation has moved to the 2.0% target.
The other important data to watch will be Wednesday’s ADP jobs report followed by Friday’s nonfarm payroll report.
GBP/USD technical analysis
The GBP/USD exchange rate has pulled back in the past few weeks. It dropped from a high of 1.3050 to a low of 1.2805, its lowest point on Monday. The pair has moved slightly above the 50-day moving average while the two lines of the MACD have formed a bearish crossover sign.
It has formed a doji chart pattern, a popular reversal sign. It is also between the first and second resistance points of the Woodie pivot point. Therefore, the pair will likely bounce back as buyers target the key resistance point at 1.2940, the second resistance point of the Woodie pivot point.
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