Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3015.
- Add a stop-loss at 1.3250.
- Timeline: 1-2 days.
Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3250.
- Add a stop-loss at 1.3015.
The GBP/USD pair has rebounded in the past few days, moving from a low of 1.3015 last week to a high of 1.3183, its highest point since October 30th. It has dropped by almost 4% from its highest point in September.
UK Jobs Numbers Ahead
The GBP/USD pair rose ahead of the upcoming UK jobs and GDP numbers, which will shed more light on the state of the economy. A report by the Office of National Statistics (ONS) is expected to show that the unemployment rate rose from 4.8% in August to 4.9% in September.
They also expect the numbers to reveal that the economy added 50k jobs in September from the previous month’s 91k. These numbers will provide more color on the economy.
The ONS will also publish the latest GDP data on Thursday. The average estimate is that the economy grew by 0.2% in Q3 from the previous 0.3%. Also, the agency will publish the latest exports and imports, manufacturing, and industrial production numbers.
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These numbers come as traders wait for the upcoming budget speech by Rachel Reeves, the Chancellor of the Exchequer next week. In a statement on Monday, she continued to hint that she will hike taxes in the next budget in a bid to fill her budget hole.
The GBP/USD pair is also reacting to the upcoming end of government shutdown in the United States after a group of eight senators voted to advance the reopening. A move to end the government will lead to the release of economic data, such as jobs and inflation.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD exchange rate has plunged from a high of 1.3730 on September 17 to a low of 1.3014 last week.
It has formed a double-top pattern at 1.3718 and the neckline at 1.3140, a level it has retested in the past few days.
The pair has remained above the 38.2% Fibonacci Retracement level at 1.3148. It has remained below the 50-day and 100-day Exponential Moving Averages, while the Average Directional Index (ADX) has jumped to 37, but has started to point downwards.
Therefore, the most likely scenario is where it resumes the downtrend, and possibly retests the support at 1.3000. A move above the resistance at 1.3250 will invalidate the bullish outlook.
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