Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3600.
- Add a stop-loss at 1.3300.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.3300.
- Add a stop-loss at 1.3600.
The GBP/USD exchange rate continued rising this week, even as the UK published a weak GDP report a week after the Bank of England (BoE) released its interest rate decision. It rose ahead of the upcoming US macro data on GDP, durable goods orders, and consumer confidence.
US Macro Data Ahead
The GBP/USD pair continued rising this week as investors continued reacting to last week's Bank of England interest rate decision.
The bank, as was widely expected, decided to cut interest rates by 0.25% as it moved to support the economy, which is showing signs of slowing down. Indeed, a report released on Monday by the Office of National Statistics (ONS) showed that the economy slowed in the third quarter.
The economy grew by 1.3% in the third quarter, down from 1.4% in the second quarter. It grew by 1.2% in Q3 from the second quarter, lower than the median estimate of 1.3%.
The BoE rate cut came shortly after a report showed that the country's inflation dropped sharply in November. In his recent statement, Andrew Bailey hinted that consumer prices will continue falling, and possibly hit the 2% target in April.
The next key important catalyst for the GBP/USD pair will be the upcoming US macro data, which will help the Federal Reserve when making its interest rate decision next year.
Top Regulated Brokers
The Conference Board will release that latest consumer confidence report later on Tuesday. Economists expect the report to show that confidence rose to 92 in December from the previous 88.7.
The US will all release other key macro numbers, including the latest GDP, industrial and manufacturing production, and durable goods orders.
These numbers came shortly after the Fed delivered its third interest rate cut of the year. It reduced its benchmark rate from between 3.75% and 4% to between 3.50% and 3.75%.
GBP/USD Technical Analysis
The 12-hour timeframe chart shows that the GBP/USD exchange rate has rebounded in the past few days, moving from a low of 1.3000 in November to a high of 1.3478 today.
It has moved closer to the 61.8% Fibonacci Retracement level. Also, the pair’s 50-period and 100-period Exponential Moving Averages (EMA) have made a bullish crossover pattern.
The Relative Strength Index (RSI) and other oscillators have continued rising. Therefore, the pair will likely continue rising as bulls target the next key resistance level at 1.3600, which is along the 78.6% Fibonacci Retracement level.
Ready to trade our free trading signals? We’ve made a list of the best UK forex brokers worth using.