Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3450.
Add a stop-loss at 1.3200.
Timeline:1-2 days.
Bearish view
Sell the GBP/USD pair and set a take-profit at 1.3200.
Add a stop-loss at 1.3450.
The GBP/USD pair moved sideways on Tuesday as investors focused on the ongoing Iran war and Donald Trump's pressure on countries to help reopen the Strait of Hormuz. The pair was trading at 1.3310, up slightly from this month's low of 1.3218.
BoE and Federal Reserve Interest Rate Decisions
The GBP/USD exchange rate rose slightly as energy prices slipped a bit amid the ongoing pressure from the United States on reopening the Strait of Hormuz, where most oil and fertilizer passes through.
Brent and the West Texas Intermediate crude oil prices retreated to $100 and $94, respectively. Still, oil prices will likely remain high as analysts believe that Iran will do whatever possible to maintain oil prices high in the near term.
The next important GBP/USD news will be the upcoming Federal Reserve and Bank of England (BoE) interest rate decisions. Economists expect these banks to maintain interest rates unchanged.
The Fed will likely leave rates unchanged between 3.50% and 3.75%, where they have been in the past few months. Officials are concerned that inflation remains high, and the rising prices will push it higher. For example, gasoline, fertilizer, and travel costs have continued rising.
The GBP/USD exchange rate will also react to the upcoming Bank of England interest rate decision. Economists expect the bank to leave rates intact at 3.75%, with officials embracing a more hawkish tone than they had in the last meeting.
GBP/USD Technical Analysis
The daily timeframe chart shows that GBP/USD pair bottomed at 1.3215 last week and then bounced back to the current 1.3300 as investors waited for the upcoming Fed and BoE interest rate decisions.
It formed a small harami candle, which is made up of a small bullish candle that follows a big bearish candle. Harami is a Japanese word for pregnant and this candle is a popular reversal sign.
Still, the pair remains below the 50-day Exponential Moving Average (EMA) and the Supertrend indicator. Therefore, the pair will likely remain in this range in the next few days. A rebound may see it rise to the key resistance level at 1.3450. On the other hand, a move below this month’s low of 1.3215 will invalidate the bullish outlook.