Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3650.
Add a stop-loss at 1.3400.
Timeline: 1-2 days.
Bearish view
Sell the GBP/USD pair and set a take-profit at 1.3400.
Add a stop-loss at 1.3650.
The GBP/USD exchange rate remained in a narrow range as crude oil prices jumped, as the contentious US-Iran ceasefire continued. It also wavered after the strong US consumer confidence report and as traders waited for the upcoming Federal Reserve and Bank of England interest rate decisions.
Federal Reserve Interest Rate Decision Ahead
The GBP/USD pair was in a narrow range as investors reacted to the latest US consumer confidence report.
According to the Conference Board, consumer confidence rose from 92.2 in March to 92.8 in April. This is notable as consumer spending is the biggest part of the American economy. Also, the figure rose despite the rising inflation in the United States jumped amid the rising inflation.
The pair also wavered as crude oil prices continued rising, with Brent and the West Texas Intermediate (WTI) rising to $112 and $100, respectively. As a result, data shows that the average gas price has jumped to $4.1, with the cost hitting $6.5 in California.
In addition to gasoline, other products like fertilizer and transport prices have jumped recently, pushing inflation to over 3%. As a result, focus will be on the Federal Reserve, which will hold its monetary policy meeting later today.
Economists expect the bank to leave interest rates unchanged between 3.50% and 3.75%, where they have been in the past few months. Traders will also watch Jerome Powell’s final press conference as the Federal Reserve Chairman.
Specifically, they will want to see whether he will remain in the Fed as the governor. Signs that he will leave the Fed mean that Trump will have a chance to appoint another official at the bank.
The next important catalyst for the GBP/USD pair will be the upcoming Bank of England (BoE) interest rate decision on Thursday. Economists expect the bank to leave rates unchanged despite the rising inflation in the near term.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD pair has moved sideways in the past few days. It has remained between the important support and resistance levels at 1.3450 and 1.3595.
The pair is slowly forming a bullish flag pattern, which is a common continuation sign in technical analysis. It also formed an inverted head-and-shoulders pattern.
The pair has remained above the 50-day and 100-day Exponential Moving Averages (EMA). It also remained above the Supertrend indicator.
Therefore, the pair will likely have a strong bullish breakout in the near term, potentially to this month's high of 1.3595. A move above that level will point to more gains, potentially to 1.3650.