Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3330.
- Add a stop-loss at 1.3525.
- Timeline: 1-2 days.
Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3525.
- Add a top-loss at 1.3330.
The GBP/USD exchange rate remained in a tight range on Wednesday as investors focused on the upcoming Federal Reserve minutes. It also wavered as the US government shutdown continued. It was trading at 1.3420, down by over 2.2% from its highest point in September.
FOMC Minutes Ahead
The GBP/USD exchange rate retreated as market participants waited for the upcoming Federal Reserve minutes. These minutes will provide more color on the last meeting in which officials decided to cut interest rates for the first time since last year.
Most officials supported the interest rate cut, and the dot plot showed that officials expect more cuts in the coming meetings. The bank cited the deteriorating labor market for the cut.
A lot has changed since that meeting happened, with the government shutdown being the main one. Democrats and Republicans have differed on how to fund the government, with the Republicans preferring a clean spending package. Democrats have tied their support to reforms in the healthcare sector.
The GBP/USD pair has remained in a tight range as American economic data drought continued during the government shutdown. For example, the Bureau of Labor Statistics (BLS) did not publish the closely-watched jobs numbers.
If the shutdown continues, it means that the BLS will not publish the latest consumer inflation data next week.
There will be no economic data from the US and the UK on Wednesday. As such, traders will focus on any new development on te US shutdown.
GBP/USD Technical Analysis
The daily chart shows that the GBP/USD pair has pulled back in the past few days. It has dropped from a high of 1.3725 in September to 1.3425 today.
The pair has moved between the lower and middle sides of the Bollinger Bands indicator. It has also dropped below the 50-day Exponential Moving Average.
The GBP/USD pair’s Relative Strength Index (RSI) and the MACD indicators have moved sideways. Therefore, the most likely scenario is where the pair remains in this range in the coming days. A bearish breakout will see it drop to the next key support at 1.3330.
On the other hand, a move above the key resistance at 1.3500 will invalidate the bearish outlook.
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