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The GBP/USD price bounced back ahead of the upcoming meeting between Joe Biden and Speaker Kevin McCarthy on the debt ceiling issue.
- Sell the GBP/USD pair and set a take-profit at 1.2400.
- Add a stop-loss at 1.2650.
- Timeline: 1-2 days.
- Set a buy-stop at 1.2560 and a take-profit at 1.2650.
- Add a stop-loss at 1.2475.
The GBP/USD price bounced back ahead of the upcoming meeting between Joe Biden and Speaker Kevin McCarthy on the debt ceiling issue. It also rebounded as the US dollar index retreated while the SPDR Regional Bank ETF (KRE) bounced back. The pair rose to a high of 1.2525, which was a few points above Friday’s low of 1.2442.
The GBP/USD rose mostly because of the broader US dollar sell-off, which coincided with the comeback of America’s regional bank stocks. Most banks, including the vulnerable PacWest and Western Alliance, jumped by more than 5% on Monday. As a result, the KRE ETF jumped by over 3.75%.
The other reason why the dollar dropped was simply profit-taking since the currency had the best week in three months. In most periods, assets in a strong rally tend to retreat as buyers start taking a profit. Further, the dollar declined after Biden confirmed that he will meet with speaker Kevin McCarthy later today to deliberate on the debt ceiling issue.
From the data side, the GBP/USD pair will react to two key economic numbers. In the morning hours, the Office of Natonal Statistics will publish the latest job numbers. Economists expect that the British economy did well in April, helped by the relatively low energy prices.
The unemployment rate is expected to come in at 3.6% while average earnings without bonuses are expected to rise by 6.8%. These numbers will come in a few days after the Bank of England decided to hike interest rates by 0.25%.
The key event to watch from the US will be the upcoming retail sales numbers. Economists believe that sales jump in April as inflation dropped. The pair will also react to statements by Fed officials like Raphael Bostic and Loretta Mester.
The GBP/USD pair bounced back after falling to a low of 1.2443 on Friday. It then jumped to a high of 1.2534, which was higher than the ascending trendline that connects the lowest point since March 24th. The Relative Strength Index and the Stochastic Oscillator have drifted upwards. It also remains slightly below the Ichimoku cloud.
Therefore, the pair will likely continue retreating, with the initial target being last week’s low of 1.2448. A move below that level will see it drop to the key support at 1.2400.
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