Bearish View
- Sell the GBP/USD pair and set a take-profit at 1.3500.
- Add a stop-loss at 1.3600.
- Timeline: 1 day.
Bullish View
- Set a buy-stop at 1.3580 and a take-profit at 1.3650.
- Add a stop-loss at 1.3520.
The GBP/USD price declined sharply in the overnight session as investors rushed to the safe haven of the US dollar. It is trading at 1.3550, which is about 0.65% below the highest level this week.
Global Tensions Rise
The GBP/USD pair declined as the crisis between Western countries and Russia increased. On Wednesday, Vladimir Putin vowed to retaliate against sanctions imposed by several countries while Ukraine announced a state of emergency.
At the same time, Ukraine said that some of its government websites had been hit in a cyber attack possibly from Russia. Several financial institutions were also hit hard.
Therefore, with Western countries vowing more sanctions, there is a likelihood that tensions will keep rising in the coming weeks.
The GBP/USD pair will react to a speech by Andrew Bailey, the Bank of England (BOE) governor. In it, he will likely talk about the state of the economy now that the bank has already implemented two rate hikes.
In a statement on Wednesday, Bailey said that he expects inflation to remain at elevated levels now that energy prices are soaring. The price of crude oil is approaching $100 while natural gas has risen sharply in the past few weeks.
The other mover will be the latest economic data from the United States. The statistics agency will publish the second estimate of US GDP numbers for the fourth quarter. Analysts expect the data to show that the economy expanded by 6.9% in Q4 as consumer spending improved.
The US will also release the latest consumer spending and new home sales numbers. Economists expect the data to show that new home sales dropped from 811k in December to 806k in January. The other key data that will come out will be the initial and continuing jobless claims data.
GBP/USD Forecast
The GBP/USD pair remained in the same channel where it has been in the past few days. It is trading at 1.3550, which is a few points above the lower side of the channel. It has also moved slightly below the neutral level of the Schiff pitchfork tool and is slightly above the 38.2% Fibonacci retracement level.
It is also slightly below the 25-day and 50-day moving averages. Therefore, the pair will likely keep falling as bears target the next key support at 1.3500.
