Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3800.
- Add a stop-loss at 1.3500.
- Timeline:1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3500.
- Add a stop-loss at 1.3800.
The GBP/USD exchange rate remained unchanged in the past few days as investors focus on the upcoming upcoming UK jobs and consumer inflation report. It was trading 1.3625 on Tuesday morning, down substantially from the year-to-date high of 1.3871.
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UK Jobs and Inflation Report Ahead
The GBP/USD pair was flat ahead of the upcoming UK jobs data. A report to be published later on Tuesday is expected to show that the unemployment rate remained unchanged at 5.1% as the economy lost 40,000 jobs.
The other important report to watch will be the upcoming UK consumer and producer inflation report on Wednesday. Economists polled by Reuters expect the upcoming report to show that the headline Consumer Price Index (CPI) dropped from 3.4% in December to 3% in January.
Core inflation, which excludes the volatile food and energy prices, is expected to come in at 3.1% in January from 3.2% in December. The Retail Price Index (RPI) dropped from 4.2% to 3.9%
Most economists also expect that the headline inflation numbers will continue falling in the coming months, with ING and Barclays expecting the figure to drop to the target of 2.0% in the coming months.
The next key catalyst for the GBP/USD pair will be the upcoming Federal Reserve minutes. Economists expect the upcoming minutes to show the rationale of the last monetary policy meeting. It will also provide more hints on what to expect in the coming meetings.
The US will also release more economic data this week, including housing starts and building permits. Also, the US will publish the latest industrial and manufacturing production numbers, while top Fed officials like Michelle Bowman and Mary Daly will talk.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD pair has come under pressure in the past few weeks, moving from a high of 1.3870 in January to the current 1.3630.
It has remained above the 50-day and 200-day Exponential Moving Averages (EMA) and is now forming a symmetrical triangle pattern. It also remains above the ascending trendline, which connects the lowest swings in November last year and January.
Therefore, the pair will likely continue rising as bulls target the next key resistance level at 1.3800. A move above that level will point to more gains, potentially to the year-to-date high of 1.3871.