GBP/USD under pressure ahead of US PCE, trading around 1.2633. Watch for moves between 1.2575-1.2700 amid UK/US GDP data, BoE rate decisions.
- Sell the GBP/USD pair and set a take-profit at 1.2575.
- Add a stop-loss at 1.2675.
- Timeline: 1-2 days.
- Set a buy-stop at 1.2650 and a take-profit at 1.2700.
- Add a stop-loss at 1.2575.
The GBP/USD exchange rate moved sideways on Thursday morning ahead of the important US and UK GDP numbers. It was trading at 1.2633, where it has been in the past few days. This price is a few pips above last Friday’s low of 1.2575.
The GBP/USD pair will react to the upcoming UK and US GDP data. Economists expect data from the UK to show that the economy contracted in the fourth quarter.
Precisely, they expect the report by the Office of National Statistics (ONS) to reveal that the economy dropped by 0.3% in Q4 after contracting by 0.1% in Q3. On a YoY basis, economists see the economy contracting by 0.2%.
The UK economy is going through a rough patch ahead of this year’s election. Inflation, while falling, remains above the Bank of England’s target of 2.0%.
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This report will come exactly a week after the Bank of England delivered its second interest rate decision of the year. In it, they left rates unchanged at 5.25% and hinted that they would start cutting them later this year. Economists believe that the bank will deliver two or three cuts starting from August.
The US will also publish the final estimate of Q4 GDP data. In its last report, the statistics agency said that the economy expanded by 3.2% in Q4 after growing to 4.9% in the previous month. The US will publish this week’s initial and continuing jobless claims.
The most important data of the week will be the US personal consumption expenditure (PCE) report set for Friday. This figure will come on the same day when most markets will be closed for the Good Friday holiday.
The GBP/USD pair has been in a tight range in the past few days as the focus shifts to the upcoming US PCE report. It was trading at 1.2635, where it has been in the past few days. The pair is stuck a few points below this week’s high of 1.2668 and the 50-period Exponential Moving Average (EMA).
Additionally, the Percentage Price Oscillator (PPO) has drifted upwards. This is an important indicator that measures the difference between two moving averages as a percentage. It has also retreated below the Woodie pivot point while the Average Directional Index (ADX) has crashed to 21.
Therefore, the outlook for the GBP/USD pair is neutral with a bearish bias. If this happens, the next point to watch will be at 1.2575, its lowest point on Friday.
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