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The GBP/USD pair also reacted to the latest housing data.
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- Sell the GBP/USD pair and set a take-profit at 1.2548.
- Add a stop-loss at 1.2665.
- Timeline: 1 day.
- Set a buy-stop at 1.2650 and a take-profit at 1.2725.
- Add a stop-loss at 1.2560.
The GBP/USD pair bounced back in the overnight session as the US dollar index (DXY) retreated after the weak consumer confidence data. After falling to a low of 1.2547 in August, the pair rose to a high of 1.2633.
The GBP/USD exchange rate drifted upwards after the relatively weak US consumer confidence and jobs data. In a report, the Conference Board announced that the country’s consumer confidence dropped from 117 in July to 106.1 in August.
Confidence has risen in the previous two straight months. This is an important figure because of the crucial role that consumer spending plays on the economy.
A separate report by the Bureau of Labor Statistics (BLS) revealed that the labor market was softening. Job openings crashed to the lowest level since 2021 in July. There were over 1.6 million layoffs and 253k job quits during the month.
Therefore, there is a likelihood that the Fed will consider having a wait-and-see approach in its September meeting. In his statement at the Jackson Hole Summit, Jerome Powell noted that inflation remained very high and that the bank could consider hiking rates again.
The GBP/USD pair also reacted to the latest housing data. The closely-watched Case-Shiller house price index (HPI) rose by 0.9% in July as demand remains high and supplies low. Mortgage rates have also risen to the highest level in years.
There will be several important economic numbers on Wednesday. In the US, ADP will publish the latest GDP, pending home sales, and ADP nonfarm employment change numbers. Economists expect the ADP figure to show that the private sector added 195k jobs in August after adding 324k in the previous month.
The other important data to watch will be UK mortgage lending, approvals, and consumer credit numbers.
The GBP/USD pair has been in a tight range in the past few days after it moved to a low of 1.2548 on August 25th. It managed to flip the important resistance level at 1.2592 (June 29 low) into a support.
The pair remains slightly below the 25-period moving average. This price is also slightly above the lowest swings on August 14th and August 3rd. Therefore, the outlook for the pair is neutral with a bearish bias. The key support level to watch will be at 1.2448.
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