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The GBP/USD price remained in a tight range on Tuesday as traders assessed the next actions by the Federal Reserve and the Bank of England (BoE).
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- Sell the GBP/USD pair and set a take-profit at 1.2540.
- Add a stop-loss at 1.2700.
- Timeline: 1-2 days.
- Set a buy-stop at 1.2650 and a take-profit at 1.2700.
- Add a stop-loss at 1.2550.
The GBP/USD price remained in a tight range on Tuesday as traders assessed the next actions by the Federal Reserve and the Bank of England (BoE). The pair was trading at 1.2633, a few pips above last Friday’s low of 1.2580.
The US markets were closed on Monday as the country celebrated its Labor Day. As a result, there was little price action across all asset classes, including forex, stocks, and bonds.
The market action will be muted on Tuesday since there will be no important economic data from the US and the UK. The only notable report will be the upcoming UK services and composite PMIs.
Economists polled by Reuters expect the data to show that the UK’s services PMI dropped from 51.5 in July to 48.7 in August. Similarly, they see the composite PMI dropping from 50.8 to 47.9.
If they are correct, these numbers will show that the country’s key sector has moved to a contraction phase. Data published last week revealed that the manufacturing PMI remained in a contraction level again in August.
The other important data to watch will be the American factory orders numbers. Economists surveyed by Reuters expect the data to show that factory orders dropped by 2.5% in July after rising by 2.3% in the previous month.
These numbers will come a week after the US published a series of mixed economic data. The Conference Bureau said that consumer confidence dropped to 106 in August.
Another report showed that the unemployment rate rose to 3.8% in August as the economy added over 184k jobs. Wage growth continued dropping, signaling that the Federal Reserve will likely maintain interest rates unchanged.
The GBP/USD exchange rate has been in a slow downward trend in the past few weeks. In this period, it has formed a descending channel and has moved slightly below the 25-period and 50-period moving averages. The pair is also consolidating at the 61.8% Fibonacci Retracement level and the Woodie pivot point.
Therefore, the pair will likely remain in this range in the next few days as traders assess the next actions of the BoE and the Federal Reserve. The key support and resistance levels to watch will be at 1.2500 and 1.2725.
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