There will be no major economic data from the UK on Tuesday.
- Set a sell-stop at 1.2350 and a take-profit at 1.2230.
- Add a stop-loss at 1.2450.
- Timeline: 1-2 days.
- Set a buy-stop at 1.2450 and a take-profit at 1.2550.
- Add a stop-loss at 1.2350.
The GBP/USD pair bounced back during the American and Asian sessions as American stocks bounced back and bond yields slipped. The pair rose to a high of 1.2415, which was much higher than Monday’s low of 1.2280.
The GBP/USD pair moved upwards after the latest manufacturing PMI data from the United States and the UK. Data by S&P Global showed that UK’s PMI dropped from 49.3 in February to 47.9. This decline was worse than the median estimate of 48.0.
In the US, data by S&P revealed that the PMI increased from 47.3 to 49.3. The report by ISM showed that the PMI dropped to 46.3. A PMI reading of below 50 is a sign that an industry is contracting.
The pair also reacted to the latest decision by OPEC+ to slash oil production by more than 1 million barrels in the coming months. The cartel aims to boost prices after they dropped in the first-quarter. As a result, both Brent and West Texas Intermediate (WTI) rose to $85 and $80, respectively.
American stocks bounced back as oil jumped. The Dow Jones index rose by more than 300 points while the S&P 500 index rose by about 10 points. Meanwhile, the 10-year government bond yield fell to 3.43% while the 30-year dropped to 3.6%.
There will be no major economic data from the UK on Tuesday. The US will publish the latest JOLTs job openings data. Economists expect that the number of vacancies dropped from 10.82 million to 10.4 million in February. The country will also release the latest factory order numbers.
The GBP/USD pair has been forming a rising wedge pattern, which is usually a bearish sign. It moved below the lower side of the wedge on Friday and then bounced back on Monday and Tuesday morning.
The pair moved above the 50-period moving average and is approaching the first resistance level of the Woodie pivot point. At the same time, the Relative Strength Index (RSI) has pointed upwards. Therefore, because of the rising wedge, the pair will likely resume the bearish trend and retest the support at 1.2200.
However, a move above the resistance at 1.2445 will invalidate the rising wedge pattern and see it rising to the second resistance at 1.2530.