It seems like the pair will likely have a relief rally in the coming days as bulls target the important resistance level at 1.2850.
- Buy the GBP/USD pair and set a take-profit at 1.2825.
- Add a stop-loss at 1.2650.
- Timeline: 1-2 days.
- Set a sell-stop at 1.2690 and a take-profit at 1.2600.
- Add a stop-loss at 1.2750.
The GBP/USD price continued its bearish trend as the strength of the US dollar continued. The pair slipped to a low of 1.2738, which was the lowest level since September 21st. It has retreated by more than 10% from its highest point in May.
King Dollar Strength Continued
The GBP/USD pair retreated as the US dollar continued its bullish trend as global risks rose. There are risks on the ongoing crisis in Ukraine, lockdowns in China, and fears of the hawkish Federal Reserve.
There are also fears that the Bank of England (BOE) will slow down its aggressive tightening policy considering that the economy is slowing. For example, data published by the Office of National Statistics (ONS) showed that the country’s retail sales declined sharply in March.
Additional numbers by Gfk revealed that consumer confidence declined to the lowest level since 2008. These numbers are notable since consumer spending is an important part of the British economy. Also, the retail sector is one of the most important employers in the UK. Therefore, the BOE will likely pause its interest rate hikes as it watches the recovery.
The focus among investors will be on the recent economic data from the United States. The country will publish the closely-watched consumer confidence data. Economists expect these numbers will show that confidence among consumers rose for the second straight month even as inflation rose and unemployment rate fell.
The US will also release the latest durable goods order numbers. These are important numbers that measure the performance of the manufacturing sector. These orders are expected to have risen. Another important data will be on housing. We will receive the new home sales and Case-Schiller house price index data.
The GBP/USD price has been in a strong bearish trend in the past few days. It remains below the 25-day and 50-day moving averages. This is a sign that bears are still in control. At the same time, oscillators like the MACD and the Relative Strength Index (RSI) have continued falling. A closer look shows that this downward trend is actually fading.
Therefore, it seems like the pair will likely have a relief rally in the coming days as bulls target the important resistance level at 1.2850. On the flip side, a drop below the support at 1.2685 will invalidate this view.