Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3450.
- Add a stop-loss at 1.3250.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.3335 and a take-profit at 1.3250.
- Add a stop-loss at 1.3450.
The GBP/USD exchange rate continued soaring after the mixed flash manufacturing and services PMI numbers and the dovish statement from Fed’s Austan Goolsbee. It jumped to a high of 1.3358, its highest swing since February 2022.
Austan Goolsbee’s dovish statement
The GBP/USD pair continued its bullish momentum after the Chicago Fed President Goolsbee issued a dovish statement.
In a statement, he said that the Fed was prepared to make more interest rate cuts in the coming months to protect the labour market. He also noted that the bank was confident that the headline Consumer Price Index (CPI) was on a path to 2.0%.
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His statement mirrored Neel Kashkari, who backed last week's meeting's 0.50% rate cut. Like Goolsbee, he was confident that the Fed was more concerned about the labour market than the country’s inflation at this stage.
Therefore, analysts expect that the Fed will continue cutting rates in the last two meetings of this year.
The GBP/USD pair also rose after the latest flash PMI numbers from the US and the UK. In the UK, data by S&P Global showed that the UK’s manufacturing PMI retreated from 52.5 in August to 51.5 in September, missing analysts’ forecast of 52.3.
The services PMI, on the other hand, retreated from 53.7 to 52.8, while the composite PMI fell from 53.8 to 52.9. These numbers confirmed the fear that the British economy was slowing, raising hopes that the BoE will resume cutting interest rates in the last two meetings of the year.
In the US, data showed that the manufacturing PMI dropped from 47.9 in August to 47 in September, while the services and composite PMIs fell to 55.4 and 54.4, respectively. The US numbers were relatively better than the median estimates.
The key data to watch on Tuesday will be the US consumer confidence numbers by the Conference Board.
GBP/USD technical analysis
The GBP/USD exchange rate continued its strong bullish momentum as the market reflected on the Federal Reserve and BoE decisions and Monday’s PMI numbers from the US and UK PMI numbers.
It has jumped above the key resistance point at 1.3270, its highest swing on August 27. By moving above that point, the pair invalidated the forming double-top chart pattern.
The Relative Strength Index (RSI) and the MACD indicators have pointed upwards. Therefore, the path of the least resistance for the pair is bullish, with the next reference level to watch being at 1.3450.
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