Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3000.
- Add a stop-loss at 1.3200.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.3115 and a take-profit at 1.3200.
- Add a stop-loss at 1.3000.
The GBP/USD pair retreated to its lowest point since September 12 as the US dollar bounced back. It dropped to the psychological point at 1.3100, much lower than last month’s high of 1.3430.
Federal Reserve minutes and US inflation data
The GBP/USD exchange rate continued falling as the market waited for the upcoming Federal Reserve minutes, which will provide more information about the last meeting.
In it, the bank decided to cut interest rates by 0.50% as concerns about the labor market escalated. Economic numbers released earlier showed that the unemployment rate remained at 4.2% in August while the economy created fewer than 150k jobs.
Recently, however, the latest economic data showed that the economy created over 254k jobs in September, while the unemployment rate dropped to 4.1%. These numbers signaled that the labor market was still strong.
Top Forex Brokers
Therefore, while the FOMC minutes are important, the GBP/USD pair will react to the upcoming statements by Fed officials. Some of the most notable members who will talk later today will be Jeff Jefferson, Austan Goolsbee, and Tom Barkin.
A key theme emerging from the recent Fed officials statements is that the bank has engineered a soft landing. As a result, officials expect that the next cuts will be smaller than the first cut.
Analysts expect the Fed will cut rates will be gradual in the next few meetings. In this, they expect it to slash rates by 0.25% in the next two meetings of the year.
GBP/USD technical analysis
The GBP/USD pair has retreated in the past few days as the US dollar bounced back. It retreated to a low of 1.3058, its lowest point since September 12.
The pair moved slightly below the 50-day moving average and the key support at 1.3260, its highest swing on August 28.
At the same time, the two lines of the Percentage Price Oscillator (PPO) have made a bearish crossover. The Relative Strength Index (RSI) has dropped below 50, while other oscillators have pointed downwards.
Therefore, the pair will likely continue falling as sellers target the next point at 1.3000. This retreat will likely happen ahead or after the Fed minutes.
Ready to trade our free trading signals? We’ve made a list of the best UK forex brokers worth using.