The GBP/USD pair rose last week as the US published its inflation data and after the Federal Reserve delivered its interest rate decision.
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- Sell the GBP/USD pair and set a take-profit at 1.2675.
- Add a stop-loss at 1.2850.
- Timeline: 1-2 days.
- Set a buy-stop at 1.2825 and a take-profit at 1.2925.
- Add a stop-loss at 1.2750.
The GBP/USD pair retreated slightly on Monday as traders waited for a busy market week. The pair, which peaked at 1.2841 on Friday, pulled back slightly to a low of 1.2780. It remains over 20% above the lowest level in 2022.
The GBP/USD pair rose last week as the US published its inflation data and after the Federal Reserve delivered its interest rate decision. The data revealed that the country’s consumer inflation dropped to 4.0% in May while core inflation fell to 5.3%.
Meanwhile, the Federal Reserve did what most analysts were expecting as it left interest rates unchanged between 5.0% and 5.25%. Therefore, Jerome Powell will have a chance to talk more about the decision and what to expect in his testimony this week.
The GBP/USD pair will focus on the UK, where the Office of National Statistics (ONS) will publish the latest consumer inflation numbers on Tuesday. Like in most developed countries, analysts believe that the country’s inflation drifted downwards in May, helped by lower energy prices.
Precisely, analysts believe that the headline CPI dropped from 8.7% in April to 8.5% in May. They also see the core CPI remaining unchanged at 6.8% during the month. The ONS will also release the producer and retail price index numbers.
These numbers will play a minimal role in the upcoming interest rate decision by the Bank of England, which will deliver its decision on Thursday. Economists believe that the bank will continue hiking interest rates by another 0.25%.
There will be no major economic data on Tuesday. The only data to watch will be the upcoming building permits and housing permits numbers.
The GBP/USD pair has been in a strong upward trend in the past few days. It managed to rise above the key resistance point at 1.2676, the highest point on May 10th. This price was also the upper side of the cup and handle pattern, which is a sign of a bullish continuation. The bullish trend is supported by the 25-period and 50-period moving averages.
The pair will likely have a break and retest pattern by falling to the support at 1.2676. If this happens, the pair will resume the bullish trend if it retests this support level.
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