Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3550.
Add a stop-loss at 1.3350.
Timeline: 1-2 days.
Bearish view
Sell the GBP/USD pair and set a take-profit at 1.3350.
Add a stop-loss at 1.3550.
The GBP/USD pair wavered as traders focused on the new developments between the US and Iran, which pushed crude oil and natural gas prices to the lowest level in weeks. It was trading at 1.3450 ahead of the crucial US and UK services PMI numbers, which may help to determine the next Federal Reserve and Bank of England interest rate decisions.
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US and UK Services PMI Data
The GBP/USD pair has moved sideways in the past few days after the Federal Reserve and Bank of England (BoE) left interest rates unchanged. The two banks noted that inflation was still a challenge in the two countries.
Looking ahead, the next key catalyst for the pair will be the upcoming US and UK services PMI numbers. Economists expect the upcoming report to show that UK’s services PMI figure jumped from 48.8 in June to 51.8 in July. This increase will push the composite PMI figure to 52.1, a sign that the economy is doing relatively well.
Recent data showed that the country’s retail sales did well in June, even as the country goes through a cost-of-living crisis.
Meanwhile, the S&P Global and ISM services PMI figures are expected to move to 53.6 and 54.5. These numbers, together with other key metrics from the US suggest that the economy is doing well.
The GBP/USD pair will also reacted to the upcoming ADP nonfarm payrolls report. Economists expect the data to reveal that the economy added 68k jobs in July from the previous 98k.
The Bureau of Labor Statistics (BLS) will publish the latest NFP numbers on Friday. A strong jobs report will raise the possibility of the Federal Reserve hiking interest rates.
The pair is also reacting to falling oil prices amid talks aimed at reopening the Strait of Hormuz.
GBP/USD Technical Analysis
The daily chart reveals that the GBP/USD pair has jumped in the past few days, moving from the July low of 1.3272 to the current 1.3450. It has soared above the 50-day moving average.
The pair is slowly forming a bullish flag or pennant pattern, which often leads to a bullish breakout. It is also sitting above the Major S/R pivot point of the Murrey Math Lins tool.
If this happens, the next key target to watch will be the strong, pivot, reverse level of 1.3550. A drop below the support of 1.3400 will invalidate the bullish outlook.
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