Bearish view
Sell the GBP/USD pair and set a take-profit at 1.3200.
Add a stop-loss at 1.3400.
Timeline: 1-2 days.
Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3400.
Add a stop-loss at 1.3200.
GBP/USD retreated for a third consecutive day as the US dollar extended its rally ahead of the Federal Reserve’s second-to-last interest rate decision of the year. The pair dropped to key support at 1.3300, modestly below this month’s high of 1.3418.
Federal Reserve to Make its Interest Rate Decision
The GBP/USD pair has been in a steady downward trend this week after the US published mixed macro numbers. A report by the Conference Board showed that consumer confidence rose from 84.2 in September to 91.7, much higher than the expected 81.2.
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Another report revealed that new home sales rose 676k in September, higher than the expected 651k. The house price index was also higher than what analysts were expecting. On the other hand, durable goods orders rose 1.8% in September from 0.1%.
These numbers come as traders wait for the October Federal Reserve interest rate decision. Economists expect the bank to leave interest rates unchanged between 3.75% and 4%. A hawkish decision will be bullish for the US dollar.
The GBP/USD pair will next react to the upcoming US macro numbers that comes out on Thursday. The Bureau of Economic Analysis (BEA) will release the first estimate of the US GDP numbers. Economists expect the data to show that the economy expanded by 3.2% in Q3, helped by the ongoing artificial intelligence rollout. It had expanded by 2.2% in the previous quarter.
The US will also publish the personal consumption expenditure (PCE) and personal income report on Thursday. These numbers will help the Fed when delivering the next interest rate decision in December.
GBP/USD Technical Analysis
The daily chart shows that the GBP/USD pair has pulled back in the past few days. It dropped from a high of 1.3418 last week to the current 1.3300. This retreat is a retracement after it surged by over 2% between its lowest level and its highest point this month.
The pair has slumped below the 50-day Exponential Moving Average (EMA). At the same time, the it has moved below the Point of Control (PoC) at 1.3325, while the Relative Strength Index (RSI) has pointed downwards.
Therefore, the pair will likely continue falling, potentially to the key support level of 1.3250. A move above the resistance of 1.3350 will invalidate the bearish outlook.
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