The pair will likely keep falling as bears target the next key support level at 1.3050.
Sell the GBP/USD and set a take-profit at 1.3150.Add a stop-loss at 1.3180.Timeline: 2 days.
Set a buy-stop at 1.3155 and a take-profit at 1.3200.Add a stop-loss at 1.3100.
The GBP/USD pair remained rangebound on Monday as investors reacted to the strong American non-farm payrolls (NFP) data and the ongoing crisis in Ukraine. It is trading at 1.3115, where it has been in the past few days.
US and UK Recovery
Recent economic data from the US and UK have painted pictures of economies that are having a steady recovery. Two weeks ago, numbers by the Office of National Statistics (ONS) revealed that the UK unemployment rate has dropped to the lowest level since the pandemic started.
The same picture was painted on Friday when the US published its latest employment numbers. The data showed that the economy added over 410k jobs in March. The Bureau of Labor Statistics also revised the February jobs numbers to 750k.
However, the common denominator is inflation, which has pressured the Fed and the Bank of England to embrace a more hawkish tone. Recent data from the UK revealed that the headline consumer price index (CPI) rose to a multi-decade high of 6.2%. Another survey showed that more UK companies are now expecting to raise prices than at any time since 1980s.
Meanwhile, in the US, recent data revealed that inflation rose to the highest point since 1970s. Worse, the situation is expected to worsen as commodity prices are expected to rise as the crisis in Ukraine worsens. Russia has said that it will demand payments for its commodities in rubles, which could lead to more shortage.
The only major catalyst for the GBP/USD pair will be the upcoming speech by Andrew Bailey, the Bank of England (BOE) governor. In his statement, he will likely provide his opinion on how fast the BOE is expected to keep rising interest rates. His statement will be watched closely because the bank will not hold its meeting this month.
The GBP/USD recovery peaked at 1.3300 in March. Since then, the pair has been making a slow downward trend and is currently trading at 1.3115. It has moved slightly below the 25-day moving average while the Relative Strength Index (RSI) is at the neutral level at 50. It has also formed what looks like a head and shoulders pattern.
Therefore, the pair will likely keep falling as bears target the next key support level at 1.3050. This view will be invalidated if the price moves above 1.3200.