Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3700.
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 1.3700.
The GBP/USD exchange rate continued rising, reaching its highest level since February 17 this year. It has jumped by over 3.20% from its lowest point this year as traders focus on the upcoming UK macro data and falling tensions between the US and Iran.
UK GDP Data and Falling Geopolitical Tensions
The GBP/USD pair continued its strong uptrend this week as investors reacted to the ongoing developments between the US and Iran.
Media reports suggest that there are backchannel deliberations between the US and Iran, with face-to-face talks set to happen before the ceasefire ends.
An end to the war will lead to a strong reversal in reversal in the energy market as crude oil and natural gas from the Gulf start flowing again. It will also lead to a risk-on sentiment among investors, which explains why the US dollar is falling and risky assets like stocks and cryptocurrencies are soaring.
The next key catalyst for the GBP/USD pair will be the latest US import and export prices data, which will come out on Wednesday. These numbers will provide more information about the impact of Donald Trump's tariffs on trade.
The Office of National Statistics (ONS) will publish the latest GDP data on Thursday. Economists expect the upcoming numbers to show that the British economy grew by just 0.1% in February after stagnating in the previous month.
The UK will also release the latest industrial and manufacturing production report, which will provide more information about the country’s economic growth. This growth likely reversed in March as the war led to higher energy prices in the country.
Several Federal Reserve officials will talk in the next two days, with the most notable ones being Christopher Waller, John Williams, Stephen Miran, and Michelle Bowman. These officials will provide more information on what to expect in the upcoming meeting.
GBP/USD Technical Analysis
The daily timeframe chart explains why the GBP/USD pair has jumped sharply in the past few days. This rebound happened after the pair formed a falling wedge-like pattern,which is a common bullish reversal sign in technical analysis.
The pair also formed an inverted head-and-shoulders pattern, another common bullish reversal sign whose right shoulder was at 1.3151. Also, the Relative Strength (RSI) and the Stochastic Oscillator have continued rising.
Therefore, the pair will likely continue rising in the near term, potentially to the psychological level at 1.3700. However, a brief pullback is possible as some investors start booking profits. If this happens, the pair may drop and retest the key support level at 1.3500.