The GBP/USD pair started pulling back on Friday as bulls started taking profit after the strong performance in March.
- Sell the GBP/USD pair and set a take-profit at 1.2250.
- Add a stop-loss at 1.2425.
- Timeline: 1 day
- Set a buy-stop at 1.2350 and a take-profit at 1.2435.
- Add a stop-loss at 1.2250.
The GBP/USD exchange rate continued retreating on Monday morning as the US dollar continued its comeback. The pair pulled back to 1.2330, which was much lower than last month’s high of 1.2420. It remains about 4.50% above the lowest point in March.
The GBP/USD pair started pulling back on Friday as bulls started taking profit after the strong performance in March. It dropped slightly on Monday as inflation concerns continued following OPEC’s surprise decision to cut production.
In a statement on Sunday, OPEC+ announced that it will slash oil production by about 1 million barrels per day. Saudi Arabia and Russia will each cut production by 500k barrels each. Iraq, Kuwait, and the UAE will slash by 211k, 144k, and 128k, respectively.
These oil cuts are intended to push oil prices higher in the coming months. Prices have remained in a tight range in the past few days, with Brent staying below $90 for a while. If OPEC+ succeeds, inflation in the UK and the US will likely remain at an elevated level.
The GBP/USD pair will have a number of catalysts this week. On Monday, S&P will publish the latest manufacturing PMI figure from the US and the UK. The Institute of Supply Management will publish its PMI reading for the US. Economists believe that the manufacturing sector in the two countries improved in March.
The pair will also react to the upcoming US jobs numbers scheduled for Friday this week. These numbers will provide more light on the state of the American economy, which will, in turn, have an impact on the actions of the Federal Reserve. The Fed and the BoE will not meet in April, with the next meetings scheduled for May 3 and May 11, respectively.
The GBP/USD pair has been forming a rising wedge pattern on the four-hour chart. This pattern is one of the most popular bearish reversal patterns in the industry. It has now managed to move below the lower side of the rising wedge. It also formed a small shooting star pattern, which is usually a bearish sign as well.
Therefore, the pair will likely continue falling, with the next key reference level being at 1.2271, the highest point on February 14. A drop below that level will see it drop to the next support at 1.2200.