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The GBP/USD pair retreated after a set of weak economic numbers from the US.
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- Sell the GBP/USD pair and set a take-profit at 1.2600.
- Add a stop-loss at 1.2850.
- Timeline: 1-2 days.
- Set a buy-stop at 1.2800 and a take-profit at 1.2900.
- Add a stop-loss at 1.2700.
The GBP/USD exchange rate continued retreating after a series of mixed economic numbers from the US and the UK. The pair retreated to a low of 1.2745, the lowest level since July 7th of this year. It has retreated from last month’s high of 1.3143.
The GBP/USD pair retreated after another set of encouraging UK inflation data. Numbers by the British Retail Consortium (BRC) showed that prices in UK stores dropped for the first time in two years. Prices dropped by 0.1% in July from June, signaling that inflation is falling. Prices fell to 7.6% on a year-on-year basis.
Another report by Nationwide showed that the house price index (HPI) dropped 0.2% in July from June. The index dropped by 3.8% compared to the same month in 2022, the biggest drop since 2009. Precisely, the average cost of a home in the UK stood at 260,828 pounds.
These numbers came as traders prepared for the upcoming interest rate decision by the Bank of England (BoE). Most economists expect that the bank will decide to hike rates by 0.25% to 5.25%.
Like other central banks, the BoE is working to reduce the country’s inflation, which has remained stubbornly high. It recently appointed Ben Bernanke, the former Fed Chair, to lead a review of its inflation forecasting models.
The GBP/USD pair retreated after a set of weak economic numbers from the US. The data revealed that the number of vacancies in the American economy dropped to the lowest level in two years. Also, data from ISM and S&P showed that the manufacturing sector continued to contract in July.
Looking ahead, the key data to watch on Wednesday will be the upcoming ADP private payroll numbers.
The GBP/USD exchange rate continued falling after the mixed data from the US and the UK. It flipped the important support level at 1.2847 into a resistance. This was an important level since it was the highest level in June.
The pair dropped below the 25-period and 50-period moving averages while the Stochastic Oscillator moved below the oversold level. It also moved below the ascending trendline that connects the lowest levels since May.
Therefore, the outlook of the pair is bearish, with the next support level to watch being at 1.2600, the lowest point on June 29.
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