Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3200.
- Add a stop-loss at 1.2900.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2900.
- Add a stop-loss at 1.3200.
The GBP/USD exchange rate bounced back last week and is slowly nearing its highest point this year. It jumped to a high of 1.3140, up sharply from this month’s low of 1.2700, as focus shifts to the upcoming UK economic data.
British pound surge accelerates ahead of key data
The GBP/USD pair has continued its strong surge after the UK published strong economic numbers. According to the Office of National Statistics (ONS), the economy expanded by 1.4% in February, beating the average estimate of 1.2%. It was higher than the previous month’s growth of 0.9%.
The top sectors of the economy did well, with the industrial production growing by 0.1% and the manufacturing output rising by 0.3%. Also, the construction output continued doing well during the month.
The concern is that Donald Trump’s tariffs on the UK and other countries may interfere with the recovery. Trump has boosted tariffs on UK goods to 10%, a move that may interrupt goods trade worth billions of dollars.
The next key catalyst for the GBP/USD pair will be the upcoming UK inflation and jobs data. Economists polled by Reuters expect the data to show that the economy created 95k jobs after adding 144k a month earlier.
The average estimate is that the country’s inflation rose from 2.8% in February to 3.2% in March, while the core CPI dropped from 3.5% to 3.2%. The estimate is that the country’s retail sales rose by 3.1%.
These inflation numbers mean that the Bank of England (BoE) may decide to pause its interest rates in the next meeting as it works to avoid a stagflation.
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The GBP/USD pair also surged as the US dollar index plunged amid concerns about the role of the greenback as a safe haven because of Donald Trump's tariffs.
GBP/USD technical analysis
The daily chart shows that the GBP/USD exchange rate has been in a strong bullish trend in the past few weeks as the US dollar index plunged.
The recent rebound happened after the pair dropped to the lower side of the ascending channel shown in green. It has also moved above the 50-day Exponential Moving Average (EMA).
It has moved to the weak, stop & reverse point of the Murrey Math Lines, and is nearing the upper side of the ascending channel.
The Directional Movement Index (DMI) indicator has continued rising, a sign that the trend is strengthening. Therefore, the pair will likely keep rising as bulls target the next key resistance level at 1.3200, the ultimate resistance of the Murrey Math Lines.
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