Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3450.
- Add a stop-loss at 1.3200.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3200.
- Add a stop-loss at 1.3450.
The GBP/USD exchange rate wavered on Monday as traders waited for the latest Federal Reserve and Bank of England (BoE) interest rate decisions. It also reacted to the ongoing geopolitical issues and last week’s macro data from the United Kingdom.
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Fed and BoE Interest Rate Decisions
The GBP/USD pair was in a tight range as the geopolitical situation between the UK and Iran improved. The two sides did not fire any missiles during the weekend, with media reports suggesting that Trump is afraid of the falling US weapons stockpiles.
Crude oil prices retreated modestly on Monday, with Brent and the West Texas Intermediate (WTI) moving to $87 and $85, respectively. If the situation continues, it means that the inflation risk will fade in the near term.
The GBP/USD pair is reacting to last week’s macro data from the UK. A report showed that the labor market was relatively stable in the UK. Another report showed that the country’s inflation slowed in June as food and energy prices dropped.
A separate survey by the Bank of England showed that UK prices will peak lower than expected. These numbers may push the Bank of England to hold interest rates steady instead of hiking later this year. The BoE will deliver its interest rate on Thursday this week.
The other key catalyst for the GBP/USD pair will be the upcoming Federal Reserve interest rate decision. Economists expect the bank to leave interest rates unchanged between 3.50% and 3.75%. Officials will likely have a hawkish tilt, pointing to the elevated inflation rate.
A Polymarket poll suggests that many traders anticipate that the Federal Reserve will hike later this year. This interest rate hike may happen as soon as in the September or October meetings.
BTC/USD Technical Analysis
The daily chart shows that the BTC/USD pair peaked at 1.3558 earlier this month and then pulled back to the current 1.3323 as the US dollar strengthened. It has slipped below the 50-day moving average. The Relative Strength Index (RSI) has dropped below 50.
At the same time, the Average Directional Index (ADX) has fallen to 15, a sign that the downtrend is losing steam. Therefore, the most likely GBP/USD forecast is moderately bullish. It may rebound modestly as investors buy the dip. If this happens, the pair will likely retest the key resistance at 1.3450.
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