The pair will likely continue its consolidation phase today. The key support and resistance levels will be at 1.300 and 1.3200, respectively.
Sell the GBP/USD and set a take-profit at 1.3050.Add a stop-loss at 1.3165.Timeline: 1-2 days.
Set a buy-stop at 1.3130 and a take-profit at 1.3200.Add a stop-loss at 1.3050.
The GBP/USD pair remained in a tight range on Tuesday morning as investors continued to assess the impact of the ongoing war in Ukraine. It is trading at 1.3100, where it has been in he past few days. This price is about 1.5% below the highest point in mid-March.
The GBP/USD pair has been moving sideways in the past few days as investors assess the next options for the Bank of England (BOE) and the Federal Reserve.
Analysts agree that the two central banks are between a rock and a hard place. With the unemployment rate falling and inflation are rising, the two banks have decided to keep hiking interest rates. The BOE has already delivered three rate hikes while the Fed made its first hike in March.
The biggest concern is that the two economies will become more at risk if they become more aggressive. At the same time, there are concerns that failure to act could lead to a substantially higher inflation.
In his annual letter to shareholders, JP Morgan’s Chief Executive warned that there will be more volatility in the coming months. He recommended that the Fed should hold the course and deliver more rate hikes in a bid to slow inflation.
The GBP/USD is also moving sideways as investors focus on the ongoing crisis in Ukraine. The UK and US are both considering more sanctions on Russia after the country was accused of war crimes. As the escalation continues, we could see more inflation as the price of energy continue rising.
There will be no major data from the US and UK today. The only catalyst will be the latest services and composite PMI numbers by Markit and the Institute of Supply Management (ISM). Their impacts on the pair will be muted though.
The GBP/USD pair has been in a tight range in the past few days. As a result, the pair is trading at the 25-day moving average. It has also moved between the middle and lower lines of the Donchian Channels while the Relative Strength Index (RSI) has moved below the neutral level at 50. The pair has also dropped below the 23.6% Fibonacci retracement level.
Therefore, the pair will likely continue its consolidation phase today. The key support and resistance levels will be at 1.300 and 1.3200, respectively.