Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3330.
- Add a stop-loss at 1.3525.
- Timeline: 1-2 days.
Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3525.
- Add a stop-loss at 1.3330.
The GBP/USD exchange rate remained in a tight range on Thursday morning as traders continued to focus on the ongoing US government shutdown. It pulled back to a low of 1.3400, down from the September high of 1.3725.
The GBP/USD pair dropped as the relatively muted week continued. There have been no major macro data from the UK or the US this month. The only key data came out on Wednesday last week when ADP published the weak jobs numbers, which showed that the economy shed over 36,000 jobs in September.
The other notable event came out on Wednesday when the Federal Reserve published minutes of the last meeting. These minutes provided more color on the deliberations that happened during the last meeting.
The Fed slashed interest rates for the first time this year in that meeting. Officials cited the deteriorating labor market, which they believe is a bigger risk than the country’s inflation data.
The GBP/USD pair will likely continue consolidating in this meeting as there will be no economic data from the US and the UK. US data has largely been frozen this week because of the ongoing government shutdown in the country.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD exchange rate peaked at 1.3725 and then pulled back to the important support level at 1.3400. It has now moved below the 50-day and 100-day Exponential Moving Averages (EMA).
The Relative Strength Index (RSI) and the MACD have continued falling and moved below their neutral levels. It has also formed a small head-and-shoulders pattern, a common bearish reversal sign.
Therefore, the pair will likely remain in this range and possibly drop to the key support at 1.3330, the lowest point on September 25.
A move below that support level will point to more downside, potentially to the key support at 1.3137, the lowest level in August. The bearish forecast will become invalid if it moves above the resistance at 1.3470.
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