Bearish View
- Sell the GBP/USD pair and set a take-profit at 1.2895.
- Add a stop-loss at 1.3150.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.3065 and a take-profit at 1.3150.
- Add a stop-loss at 1.2895.
The GBP/USD exchange rate was in a tight range on Tuesday morning ahead of the important UK jobs, inflation, and retail sales numbers. It was trading at 1.3060, where it has been in the past few days. This price was significantly lower than last month’s high of 1.3433.
UK Economic Data Ahead
The GBP/USD exchange pair has been under pressure in the past few days because of the recent strength of the US dollar. After bottoming at $100.3, the US dollar index has bounced back to over $103.2 as odds of a less dovish Federal Reserve have risen.
The dollar’s rally has coincided with the ongoing surge of American bond yields. Data shows that the ten-year yield continued soaring, reaching a high of 4.13%, its highest point since July 31st. The 2-year and the 5-year yields have also rebounded in the past few weeks.
This price action happened after the US published strong jobs and inflation numbers. A report by the Bureau of Labor Statistics (BLS) showed that the economy created over 254k jobs in September, while the unemployment rate retreated to 4.1%.
Another report showed that the country’s inflation retreated to 2.4% in September, while core inflation remained at 3.2%.
The GBP/USD pair will next react to the upcoming UK jobs and inflation numbers. Analysts expect the data to show that the unemployment rate remained at 4.1% in August, while average earnings retreated to 3.8%.
The UK will also publish its inflation report on Wednesday, which are expected to show that the headline CPI dropped to 1.8% in September.
Like in the US, UK bond yields have also bounced back, with the ten-year rising to 4.25%, its highest point since July. These numbers mean that the Bank of England may maintain a hawkish tone in the next meeting.
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GBP/USD Technical Analysis
The GBP/USD pair has retreated from the year-to-date high of 1.3431 to a low of 1.3053, its lowest point since September 12. It has dropped below the key support at 1.3142, its highest swing in July 2023.
The pair has moved below the 50-day moving average, while the MACD and the Relative Strength Index (RSI) have tilted downwards. It has also formed a broadening wedge pattern, pointing to a potential retreat to the next point at 1.2895, its highest point on March 8.
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