Bearish view
Sell the GBP/USD pair and set a take-profit at 1.3300.
Add a stop-loss at 1.3500.
Timeline: 1-2 days.
Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3500.
Add a stop-loss at 1.3300.
The GBP/USD pair continued its recent rally as the US dollar softened, even as the US published strong macro numbers. It rose to 1.3415, with market participants focusing on the upcoming US jobs data and Bank of England (BoE) interest rate decision.
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US Jobs and BoE Interest Rate Decision
The US dollar softened, even after the Bureau of Labor Statistics (BLS) published a strong jobs report. It said that the economy had over 7.52 million vacancies in September, higher than the expected 7.15 million. The vacancies were also higher than the previous month’s 7.19 million.
Another report showed that factory orders rose by 1.8% in September, higher than the expected 1.2%. These numbers suggest that the economy is doing relatively well. Later today, ADP will publish the latest private payrolls data, with the economy expected to add 67k jobs.
The most important data to watch will come out on Friday when the BLS releases the official jobs numbers. Economists expect the report to show that the unemployment rate remained unchanged at 4.2%.
The jobs numbers will help Kevin Warsh and the team when delivering the final decision of the year. A strong jobs report will raise the possibility of the bank hiking rates by 0.25% in the December meeting.
The GBP/USD pair will be in the spotlight as the Bank of England (BoE) delivers its interest rate decision on Thursday. Economists expect the bank to hike rates, with some expecting to push back against investors’ bets that several more rate hikes will follow next year. As such, Andrew Bailey’s statement will provide hints on what to expect.
GBP/USD Technical Analysis
The daily chart shows that the GBP/USD pair bottomed at 1.3152, its lowest level in April, June, and October this year. It has then bounced back to the current 1.3413.
The pair has now moved to the Major S/R pivot point of the Murrey Math Lines tool at 1.3428. At the same time, it has risen above the 50-day moving average, which is a bullish sign.
The pair’s Average Directional Index (ADX) has dropped to 20, a sign that the rally is losing momentum. Therefore, there is a possibility that the pair will reverse in the coming days, with the next target being at 1.3300.
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