GBP/USD Forex Signal: Does Sterling Comeback Have Legs? – 14 April 2022
The pair will likely keep rising as bulls target the next resistance at 1.3200.
Buy the GBP/USD and set a take-profit at 1.3200.Add a stop-loss at 1.300.Timeline: 1-2 days.
Set a sell-stop at 1.3045 and a take-profit at 1.2973.Add a stop-loss at 1.3125.
The GBP/USD pair staged a recovery during the American session as the strong US dollar rally took a breather. The pair rose to a high of 1.3100, which was the highest level it has been since April 7th.
US Retail Sales Ahead
The GBP/USD pair has been in the spotlight this week because of the important economic numbers published by the Office of National Statistics (ONS).
On Monday, the ONS published mixed economic data that showed that the UK economy had a mild economic growth in February. The economy grew by just 0.1% after growing by 0.8% in the previous month. The country’s manufacturing and industrial production numbers also declined.
On Tuesday, the ONS published strong jobs numbers. The data showed that the country’s unemployment rate declined to 3.8% in the three months to February. They returned to where they were before the pandemic started. The number of job openings jumped to a record high of 1.29 million.
On Wednesday, the ONS published strong consumer and producer inflation data. The headline consumer price index (CPI) rose from 6.2% to 7.0% while core CPI jumped from 5.2% to 5.7%. The ONS warned that the country’s inflation will likely hit 10% this year.
The next key catalyst for the GBP/USD pair will be the latest US retail sales numbers. Economists expect the data to show that the country’s retail sales rose by 0.6% in March while core sales rose by 1.0% in the same period. If analysts are accurate, these numbers will signal that retail sales did well even as consumer prices soared.
Still, these numbers will likely not change the decision of the Fed. In a statement on Wednesday, James Bullard said that the bank should be aggressive when it comes to tightening. He said:
“Getting to neutral isn’t going to be enough it doesn’t look like, because while some of the inflation may moderate naturally . . . there will be a component of it which won’t.”
The GBP/USD pair dropped to the important support level at 1.300 this week. This was a notable level since it was also the lowest it has been since March 14th. The pair then rebounded as investors waited for the upcoming US retail sales data. It also managed to move above the descending trendline shown in black.
Therefore, the pair will likely keep rising as bulls target the next resistance at 1.3200. A drop below the support at 1.3000 will mean that there are still more sellers in the market.