The outlook of the pair is neutral with a bearish bias.

Bearish View

• Set a sell-stop at 1.2265 and a take-profit at 1.2180.
• Add a stop-loss at 1.2400.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.2350 and a take-profit at 1.2425.
• Add a stop-loss at 1.2280.

The GBP/USD pair is in a consolidation phase after the better-than-expected US inflation data and ahead of the UK GDP numbers. It is trading at 1.2300, which is close to the lowest level this month. The pair has crashed by more than 6.5% from its highest level in April.

UK GDP Data Ahead

The UK economy is slowing down as the rising inflation continues to hamper the Covid recovery. Recent data revealed that the country’s retail sales plummeted in March while consumer inflation remains at elevated levels. Also, there are some challenges emerging in the resilient housing sector.

When making its interest rate decision last week, the Bank of England warned that recession risks were rising. It also warned that more rate hikes were necessary in a bid to fight the soaring inflation. Like the Fed, the bank is walking a thin line of reducing inflation while preventing a recession.

The Office of National Statistics (ONS) will publish important economic numbers today. Economists expect these numbers to show that the country’s trade deficit narrowed from 20 billion pounds to 18.5 billion pounds. In the same period, expectations are that the economy barely grew in March as prices rose.

The other important numbers to watch will be the March construction output, industrial production, and manufacturing production. These numbers will have limited impact on the GBP/USD pair.

The GBP/USD pair is also rangebound as investors assess the ongoing inflation trends. While gas and oil prices are at elevated levels, there are signs that inflation is nearing a peak. For example, data published by the US Bureau of Labor Statistics showed that the American inflation declined in April for the first time in eight months. The same trend could happen in the UK.

GBP/USD Forecast

The GBP/USD pair has been in a tight range in the past few days. It is trading at 1.2300, which is slightly above this week’s low of 1.2265. The price has moved between the pivot point and the first support. The downward trend is still being supported by the 25-day and 50-day moving averages. It has also formed what looks like a small bearish flag pattern.

Therefore, the outlook of the pair is neutral with a bearish bias. If this happens, the next key support level to watch will be at 1.2190. The stop-loss for this trade is at 1.2400.

The outlook of the pair is neutral at this stage. 

Bearish View

• Sell the AUD/USD and set a take-profit at 0.7445.
• Add a stop-loss at 0.7540.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 0.7520 and a take-profit at 0.7600.
• Add a stop-loss at 0.7450.

The AUD/USD pair moved sideways on Monday morning as investors refocused on the upcoming interest rate decision by the Reserve Bank of Australia (RBA). The pair is trading at 0.7500, where it has been in the past few days. This price is about 7.7% above the year-to-date low.

RBA Decision Next

The Australian dollar has done well in the past few months, helped by the dramatic increas in commodity prices. Most commodity prices that Australia exports like natural gas, coal, and copper have all increased as the crisis escalates.

The currency has also done well as investors price in a more aggressive RBA. In the past meetings, the RBA has said that it will continue leaving interest rates unchanged at 0.10% until real inflation moves to between 2% to 3%.

Therefore, analysts expect that the bank will follow the steps of other major central banks that have also started to hike interest rates. The Bank of England (BOE) has made three rate hikes while the Fed has made its first 0.25% hike.

And many Fed officials are now supportive of more hikes even as signs of recession rose. Last week, the yield curve inverted for the first time in years. In a statement during the weekend, Mary Daly of San Francisco Fed said that she was supportive of a 0.50% rate hike in May.

Therefore, the next major catalyst of the AUD/USD will be the upcoming RBA decision that comes on Tuesday. There is a likelihood that the bank will change its tone during the meeting.

The pair was also unchanged after the latest Australian retail sales numbers. According to the Australian Bureau of Statistics (ABS), retail sales held steady in February even as inflation kept rising.

AUD/USD Forecast

The AUD/USD pair has been in a strong bullish trend in the past few months. Recently, however, this price action has faded and the pair has been in a tight range. As a result, the price is along the 25-day moving average and the middle line of the Donchian Channels. The Relative Strength Index (RSI) has moved to the neutral level.

Therefore, the outlook of the pair is neutral at this stage. However, there is a likelihood that it will have a minor bearish breakout and retest the support at 0.7442. On the flip side, a move above the support at 0.7537 will mean that there are more buyers.