The GBP/USD pair will likely remain in this range on Tuesday.
- Buy the GBP/USD pair and set a take-profit at 1.2667.
- Add a stop-loss at 1.2467.
- Timeline: 1 day.
- Set a sell-stop at 1.2490 and a take-profit at 1.2400.
- Add a stop-loss at 1.2550.
The GBP/USD pair moved sideways as political temperatures rose. The pair is trading at 1.2540, which is slightly below last week’s high of 1.2660. The price is about 3% above its lowest level in May this year.
Boris Johnson Survives Impeachment
The GBP/USD pair had a mild reaction to the latest political crisis in the UK. On Monday, Boris Johnson survived his first impeachment process as anger of 2020s Downing Street parties continued.
The impeachment process moved into high gear after the proponents gained the 54 letters that were needed. However, they faced an uphill battle where they needed 180 votes for the impeachment to go on.
Now, with the impeachment process failed, it means that another vote will not happen for 12 months, which could give Johnson more clarity on how he runs the government. However, it also means that there will be more division among the ruling party members.
The GBP/USD pair will react mildly to the latest composite and services PMI numbers from the UK. these numbers are expected to show that output of the services sector was relatively strong last month as demand rose.
However, the main concern among most service providers like hotels and restaurants is that the cost of doing business has continued rising.
These numbers will come out a week ahead of the upcoming interest rate decision by the Bank of England (BOE). With inflation at elevated levels, there is a likelihood that the bank will hike rates for the fifth straight meeting.
The other important data to watch this week will be the upcoming US consumer inflation data. Analysts polled by Reuters expect that inflation in the US moderated slightly even as it remained close to its highest level in over 40 years.
The GBP/USD pair rose to the key resistance level at 1.2667 last week. This was its highest level since April 26th. It also moved to the 25-period and 50-period moving averages while the MACD is slightly below the neutral point.
The pair is also along the 38.2% Fibonacci retracement level. Therefore, the GBP/USD pair will likely remain in this range on Tuesday. The key support and resistance levels to watch will be at 1.2667 and 1.2450.