[ad_1]
The pair will likely have a bearish breakout on Wednesday, with the next level to watch being at 1.2310.
- Sell the GBP/USD pair and set a take-profit at 1.2310.
- Add a stop-loss at 1.2500.
- Timeline: 1-2 days.
- Buy the GBP/USD pair and set a take-profit at 1.2500.
- Add a stop-loss at 1.2335.
The GBP/USD price was flat during the Asian session after the IMF predicted that the British economy will contract this year. It was trading at 1.2420, a few points above this week’s low of 1.2350 ahead of the upcoming US inflation data, Fed minutes, and a statement by Andrew Bailey.
The IMF believes that the British economy will contract this year. In a report, the agency said that the economy will contract by 0.3% this year, signaling that the actions by the government have not been enough to rescue the economy. The estimate was better than the previous forecast of -0.6%.
Therefore, the IMF warned that the government will miss its priorities of reducing its public debt and borrowing below 3% of 2028 GDP. However, some independent estimates are that the economy will notch a small growth this year.
Recent data have been a bit positive. On Tuesday, data by the British Retail Consortium showed that retail sales jumped by 4.9% in March, higher than the expected 4.2%. Additional data published last month showed that the services PMI rose slightly in March.
Another positive catalyst for the British economy is that the British pound has risen by more than 10% from its lowest point in 2022. A stronger pound is positive for the economy because it will make imports cheaper.
The next data to watch will be the upcoming consumer price index data from the US. Economists expect that the headline CPI dropped to 0.2% in March while core CPI fell to 0.4%. These numbers will help predict what the Fed will do in the next meeting.
The Federal Reserve will publish minutes of the last meeting. These minutes will provide more color about the thinking of most Fed officials.
The GBP/USD pair made a bearish breakout last week, which saw it drop to a low of 1.2348 on Monday. It moved below the lower side of the rising wedge pattern shown in black. The pair is also consolidating at the 25-period and 50-period moving averages. Oscillators like MACD and the Relative Strength Index (RSI) have moved to the neutral point.
The pair has moved to the Fibonacci pivot point level. Therefore, the pair will likely have a bearish breakout on Wednesday, with the next level to watch being at 1.2310.
Ready to trade our free trading signals? We’ve made a list of the best UK forex brokers worth using.
[ad_2]