Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2750.
- Add a stop-loss at 1.2550.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2550.
- Add a stop-loss at 1.2750.
The GBP/USD pair continued rising this week and reached a high of 1.2637, its highest level since December 19. It has rebounded and crossed key resistance levels as the US dollar index (DXY) retreat gains steam.
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US dollar falls ahead of key risks
The GBP/USD pair has rebounded recently as investors focus on the risk situation in the market. The dollar index, which tracks the greenback against a basket of currencies, dropped to $106.2 this week.
This performance is mostly because of the risk situation in the world today. Some geopolitical risks have faded in the past few weeks because of Donald Trump’s policies. A ceasefire is happening between Isreal and Hamas.
Trump is also engaging with Russia, with the two countries looking for areas of cooperation, a move that may end the war in Ukraine.
On the other hand, the US is focusd on hiking tariffs on its top trading partners, a move that will lead to higher inflation and trade tensions. Countries like the UK, European Union, Canada, and Mexico have all vowed to retaliate against tariffs by the US.
There will be no major economic data from the UK this week. As such, the main focus will be on the US tariffs and the upcoming US data. The Conference Board will publish the latest US consumer confidence data. Economists expect the data to show that confidence slipped slightly in February amid layoffs by the Trump administration.
The GBP/USD pair will also react to the upcoming US GDP data scheduled on Thursday. This being the second estimate, its impact on the pair will be highly limited. Also, the data is unlikely to change the Federal Reserve’s view about interest rates.
GBP/USD technical analysis
The daily chart shows that the GBP/USD pair has been in a slow bullish trend in the past few days. It has moved above the 50-day moving average and the 38.2% Fibonacci Retracement level.
The pair has also moved above the crucial psychological point at 1.2600, while the percentage price oscillator and the Money Flow Index (MFI) have all pointed upwards, a sign that it has the momentum.
The GBP/USD pair has moved above the bottom of trading range of the Murrey Math Lines. Therefore, the pair has more upside to go, with the next level to watch being at 1.2750.
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