The GBP/USD pair will react to several important economic data on Wednesday.
- Buy the GBP/USD pair and set a take-profit at 1.2600.
- Add a stop-loss at 1.2400.
- Timeline: 1-2 days.
- Set a sell-stop at 1.2450 and a take-profit at 1.2350.
- Add a stop-loss at 1.2550.
The British pound has emerged as one of the top-performing currencies in developed countries. The GBP/USD pair rose to a high of 1.2521, the highest point in about ten months. It has jumped by more than 5% from its lowest level this year as recession fears faded.
The Sterling continued rising as investors assessed their outlook of the UK economy. Earlier this year, the consensus was that the country would be one of the worst-performing G20 countries. However, recent data shows that the country’s economy has been a bit more resilient than expected.
UK’s consumer confidence has jumped in the past few months. Retail sales have also dropped at a slower pace than expected. And the unemployment rate has remained close to a historic low while the UK has been a bit immune from the recent banking crisis.
As a result, in a statement, the Bank of England’s Chief Economist said that the bank will likely continue hiking interest rates in the upcoming meeting in May. The bank has already delivered numerous hikes, which have pushed interest rates to 4.25%, the highest point in years. Economists expect at least two rate 0.25% increases in the next two meetings.
The GBP/USD pair will react to several important economic data on Wednesday. S&P will publish the latest composite and services PMI numbers. Economists expect that the services PMI did well in March as it outperformed the manufacturing sector.
In the US, S&P and the Institute of Supply Management (ISM) will publish the latest services PMI numbers. Most importantly, ADP will publish its private nonfarm payroll numbers, which are expected to show that the economy added 200k jobs. On Tuesday, data revealed that the number of vacancies dropped below 10 million in February. This is a sign that the labor market is tightening.
The GBP/USD pair has been in a strong bullish trend in the past few weeks. On Tuesday, the pair managed to invalidate the rising wedge pattern that has been forming in the past few weeks. It also moved above the important resistance point at 1.2445, the highest point on January 23rd. The pair is supported by the 25-period and 50-period moving averages.
Therefore, the pair will likely continue rising as buyers target the next key resistance point at 1.2600. The stop-loss of this trade will be at 1.2400.