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Cup and Handle, Triple-Top Forms

The 4H chart shows that the GBP/USD pair has been in a steady upward trend in the past few days. 

Bullish view

  • Set a buy-stop at 1.2455 and a take-profit at 1.2550.
  • Add a stop-loss at 1.2350.
  • Timeline: 1-3 days,

Bearish view

  • Set a sell-stop at 1.2350 and a take-profit at 1.2250.
  • Add a stop-loss at 1.2450.

The GBP/USD exchange rate remained stuck near its highest level this year as investors waited for an extremely busy week. The pair was trading at 1.2400 on Monday morning, slightly below this year’s high of 1.2455.

BoE and Fed decisions and NFP

The GBP/USD price was unchanged on Monday as traders reflected on the important economic numbers that came out on Friday. The personal consumption expenditure (PCE) revealed that inflation held steady in December compared to November. It rose to 0.3%in December while the closely watched consumer spending data declined by 0.2% during the month.

Focus now shifts to the important data and events scheduled for this week. The most important events are the upcoming interest rate decision by the Federal Open Market Committee (FOMC) scheduled for Wednesday. In it, the committee will react to recent data on inflation and jobs and then deliver its decision.

This decision will likely set the tone for what to expect in the coming months. Economists believe that the bank will hike interest rates by 0.50% for the second straight month. And with bond yields falling and stocks and crypto rising, the bank will likely sound a bit hawkish.

The GBP/USD price will also react to the decision by the Bank of England (BoE). Like the Fed, economists expect that the BoE will also hike rates by 0.50% when it meets on Thursday. The BoE is between a rock and a hard place because of the state of the UK economy. Inflation remains above 10% while the economy is already in a recession.

Finally, the US will publish the latest non-farm payrolls (NFP) on Friday and consumer confidence data on Tuesday. These numbers will help to guide the Fed on the next phase of rate hikes.

GBP/USD forecast

The 4H chart shows that the GBP/USD pair has been in a steady upward trend in the past few days. In this uptrend, it has formed several patterns that are sending a mixed outlook about the economy. It has formed a cup and handle pattern, which is usually a sign of a bullish sign. The pair has also formed a rising wedge pattern, a triple-top, and a tiny head and shoulders pattern.

Therefore, the outlook of the pair is currently neutral until it moves above the upper side of the cup at 1.2455. Such a move will invalidate the rising wedge and the head and shoulders pattern and point to moves above 1.2500.


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