Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2700.
- Add a stop-loss at 1.2550.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2600 and a take-profit at 1.2500.
- Add a stop-loss at 1.2700.
The GBP/USD exchange rate continued its strong uptrend, reaching a high of 1.2620, its highest level since December 18. It has risen in the last five straight days as the US dollar continued falling. Its next catalyst will be key UK economic data and Federal Reserve minutes.
Top Forex Brokers
UK jobs and inflation data and Fed minutes
The GBP/USD pair rose slightly in a low-volume environment on Monday as traders positioned themselves for the upcoming FOMC minutes and UK economic data.
The first report from the UK will come out on Tuesday when the Office of National Statistics (ONS) will publish the latest jobs numbers. Economists polled by Reuters expect the report to show that the unemployment rate rose slightly from 4.4% in November to 4.5% in December.
They expect the average earnings with bonus to come in at 5.9%, a slight increase from the previous 5.6%. Signs that the labor market is softening will pressure the Bank of England to act by lowering borrowing costs.
The other key data to watch will be the January consumer and producer inflation numbers. Economists expect the numbers to reveal that inflation continued rising in January. The headline Consumer Price Index (CPI) is expected to come in at 2.8%, higher than the previous 2.5%. These numbers come two weeks after the BoE delivered its third interest rate cut of the cycle.
The GBP/USD pair will react to Wednesday’s FOMC minutes, which will provide more information about the last meeting. In it, the bank decided to leave rates unchanged. While important, these minutes will not have a big impact on the US dollar since the Fed has signaled that it will not cut interest rates soon.
GBP/USD technical analysis
The GBP/USD pair has been in a strong bullish trend in the past few days. It has moved from this year’s low of 1.2100 to 1.2620. The pair has moved slightly above the 38.2% Fibonacci Retracement level.
It has also jumped above the 50-day Exponential Moving Average and the psychological point at 1.2600. The Percentage Price Oscillator (PPO) has moved above the zero line, a sign that the bullish trend is gaining momentum.
Therefore, the pair will likely keep rising as bulls target the key resistance at 1.2770, the 50% Fibonacci Retracement level.
Ready to trade our free Forex signals? Here are The Best UK Forex Brokers to choose from.