The pair will likely resume the bearish trend as sellers target the second support at 1.1738.
Sell the GBP/USD and set a take-profit at 1.1750.Add a stop-loss at 1.2000.Timeline: 1-2 days.
Set a buy-stop at 1.1950 and a take-profit at 1.2033.Add a stop-loss at 1.1850.
The GBP/USD price pulled back slightly ahead of the upcoming UK GDP and US consumer inflation data. The pair also rose as investors continued watching the ongoing political developments. It rose to a high of 1.1935, which is slightly above this week’s low of 1.1815.
UK GDP and US inflation
The British pound has come under pressure in the past few days as investors focus on the changing UK political scene and the strong US dollar. Boris Johnson resigned as the leader of the Tories after a series of scandals.
Now, several conservative leaders have announced their bid to be the next leader. Eight candidates, including Rishi Sunak and Liz Truss made it to the ballot to replace Johnson. Some of the others are Jeremy Hunt, Penny Mordaunt, and Kemi Badenoch.
Analysts believe that the new premier will not introduce more changes. Most of them have vowed to do away with some of the recent tax cuts. Others have proposed cutting more individual taxes even as the UK budget deficit widened.
The GBP/US pair will react to the latest UK GDP numbers. Analysts expect that the economy expanded by just 0.1% in May, leading to a year-on-year increase of 2.7%. Accompanying these numbers, the ONS will publish the latest manufacturing and industrial production data. Economists expect the data to show that the two declined in May.
The next key data to watch will be the upcoming consumer inflation data from the US. Economists expect the numbers to show that the country’s inflation rose from 1.0% in May to 1.1% in June as the price of gasoline jumped to $5 per gallon. On a year-on-year basis, they expect that the country’s inflation surged to a four-decade high of 8.8%.
With America’s inflation at a multi-decade high and the unemployment rate at 3.7%, analysts expect that the Fed will deliver a jumbo 0.75% rate hike this month.
The GBP/USD pair is hovering near its lowest level since 2020 as the strength of the US dollar continued. The pair is trading at 1.1910, which is along the lower side of the inverted cup and handle pattern. This means that it has formed a break and retest pattern. It remains below the 25-day and 50-day moving averages.
It has also moved slightly above the first support of the standard pivot point. Therefore, the pair will likely resume the bearish trend as sellers target the second support at 1.1738.