The pair will likely keep rising as bulls target the next key resistance level at 1.2400.

Bullish View

• Set a buy-stop at 1.2292 and a take-profit at 1.2400.
• Add a stop-loss at 1.2100.
• Timeline: 2 days.

Bearish View

• Set a sell-stop at 1.2163 and a take-profit at 1.2080.
• Add a stop-loss at 1.2250.

The GBP/USD price jumped to the highest level since August 2nd after the latest American inflation data. It rose to a high of 1.2275, which was about 2.2% above the lowest level this month. It has risen by 5.2% from the year-to-date low.

US Dollar Pulls Back

The GBP/USD price continued its recovery in the overnight session as the market reflected on the latest American inflation data. The numbers revealed that consumer prices declined broadly helped by the falling gasoline prices.

Gas prices moved from a high of $5 in June to $4.03 in July as crude oil prices declined. West Texas Intermediate (WTI) has dropped from the year-to-date high of 135 to less than 105 in July. This is notable since gas prices have a strong part in broad inflation.

The headline consumer inflation dropped from 1.3% to 0.0% leading to a year-on-year gain of 8.5%. Inflation moved from the previous high of 9.1%. On the other hand, core inflation, which excludes the volatile food and energy prices, declined from 0.7% to 0.3%.

The US dollar index crashed by more than 1% to $104.2, which was substantially lower than the year-to-date high of $109.30. Similarly, the yield of the 10-year yield dropped to 2.79% while the 5-year dropped to 2.59%.

The next key catalyst for the GBP/USD pair will be the upcoming US producer price index (PPI) data. Economists expect the data to show that the headline PPI dropped from 11.3% to 10.4% in June. On a month-on-month basis, they expect that the PPI dropped from 1.1%.

Core PPI is expected to have dropped from 8.2% to 7.6%.  The GBP/USD pair will also react to the upcoming US GDP data scheduled for Friday.

GBP/USD Forecast

The four-hour chart shows that the GBP/USD price bounced back after the latest US inflation data. It rose to a high of 1.2275, which was the highest level since August 2. On the four-hour chart, the pair rose to the first resistance point of the standard pivot point.

It also rose above the 25-day and 50-day moving averages while the MACD has continued rising. Therefore, the pair will likely keep rising as bulls target the next key resistance level at 1.2400.

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Bearish view

• Set a sell-stop at 1.0100 and a take-profit at 1.000.
• Add a stop-loss at 1.0200.
• Timeline: 1 day.

Bullish view

• Set a buy-stop at 1.0225 and a take-profit at 1.0280.
• Add a stop-loss at 1.0050.

The EUR/USD price rose sharply after the hawkish interest rate decision by the Federal Reserve. The pair rose to a high of 1.0210, which was the highest point since Tuesday. The price is about 1.40% below the highest level last week.

Federal Reserve rate decision

The Federal Open Market Committee (FOMC) concluded its meeting on Wednesday and decided to hike interest rates by 75 basis points for the second straight meeting. This is the most aggressive that the bank has been at in decades.

The Fed has now hiked interest rates by 225 basis points as it struggles to lower inflation that has risen to the highest point in over 40 years. It is also struggling to lower this inflation without causing a recession.

Still, recent data show that the economy is deteriorating at a fast pace. For example, data published this week showed that pending home sales dropped by 8.6% in June after rising by 0.4% in the previous month. The decline was worse than the median estimate of -1.5%.

On Tuesday, data showed that new home sales declined by 8.1% after rising by 6.3% in May. These new home sales dropped from 642k to 590k. The House Price Index (HPI) declined from 1.5% to 1.4%, meaning that the sector is facing challenges.

The next key data to watch will be the first estimate of GDP data. Economists expect the data to show that the economy expanded modestly by 1.5% in Q2 after falling by 1.6% in Q1. Therefore, the Fed is battling a situation known as stagflation, where slow growth coincides with a rising inflation.

The EUR/USD pair will react to the latest German consumer price index (CPI). Economists expect that the headline inflation rose from 0.1% to 0.6% on a MoM basis. The European Commission will also publish the latest business and consumer confidence data.

EUR/USD forecast

The EUR/USD pair moved sideways after the latest Fed decision. On the 4H chart, the pair has moved slightly below the 25-day moving average while the Relative Strength Index (RSI) has formed a bearish divergence pattern. It is at the important support at 1.0132, which was the lowest level on July 22nd. The pair will likely continue falling as sellers target the parity level at 1.000.

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The pair will likely have a bearish breakout as bears target the next key support at 1.2950.

Bearish View

• Set a sell-stop at 1.3000 and a take-profit at 1.2900.
• Add a stop-loss at 1.3060.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.3025 and a take-profit at 1.3100.
• Add a stop-loss at 1.2950.

The GBP/USD price remained close to its lowest level this month as the strength of the US dollar continued. The pair is trading at 1.300, which was slightly above last week’s low at 1.2976. It has dropped by almost 1% from its highest level this month.

US Bond Yields

The GBP/USD pair is trading close to its lowest level this month as investors focus on the bond market. US bond yields continued rising as the bank earnings season continued. Last week, JP Morgan, the biggest bank in the US published weak results as its investment banking division deteriorated. On Monday, Bank of America published modest results as its net interest margin expanded.

The yields of the 10-, 5-year, and 2-year all rose to the highest levels as investors predicted that the Federal Reserve will be more aggressive in the coming months.

These results came as signs emerged that the Chinese economy was starting to slow. Data published on Monday revealed that the economy had a stronger-than-expected first quarter. It expanded by 1.3% in Q1, which was better than the expected. The economy also expanded by 4.8% on a year-on-year basis.

However, with the country maintaining its Covid zero strategy, there are signs that the economy is slowing, Retail sales declined by 3.5% in March after rising by 6.7%. This decline was worse than the median target of -1.6%. Other sectors of the economy are also showing signs of slowing down.

The economic calendar will have no events from the UK on Tuesday. The only important data will be the latest US building permits and housing starts. Economist expect the data to show that the two numbers declined slightly in March as the cost of homes rose.

GBP/USD Forecast

The GBP/USD pair has been in a downward trend in the past few weeks. The pair is hovering slightly above the key support at 1.3000. It is also trading at the same point as the 25-day and 50-day moving averages. It has also dropped slightly below the Ichimoku cloud, which is also a bearish sign.

Therefore, the pair will likely have a bearish breakout as bears target the next key support at 1.2950. A move above the resistance at 1.3050 will invalidate this view.

The pair will likely keep falling as bears target the key support at 38,000.

Bearish View

• Sell the BTC/USD pair and set a take-profit at 38,000.
• Add a stop-loss at 42,000.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 41,500 and a take-profit at 43,500.
• Add a stop-loss at 39,000.

The BTC/USD pair continued crawled back slightly even after the strong American consumer inflation data. It is hovering at the key support level of 40,000, which is substantially lower than this month’s high of near 48,000. It is also lower than its all-time high of almost 70,000.

Bitcoin Recovery Stalls

The BTC/USD pair has declined in the past few days after the US published strong inflation data. The headline data revealed that the country’s inflation rose to 8.5% in March, the highest it has been since the 1980s. Excluding the volatile food and energy prices, inflation rose by 6.5% in March.

On a month-on-month basis, inflation declined to 0.3%, the lowest level since August last year. The price action mirrored that of American stocks as the Nasdaq 100, Dow Jones, and S&P 500 indices rose by more than 1%.

This performance happened as investors predicted that the Fed will likely not be as aggressive as expected. Still, this small rebound could be a sign of a dead cat bounce considering that the latest inflation numbers were already baked in.

Meanwhile, on-chain data showed that investors used the recent rally to take some profits. At the same time, there have been limited inflow to Bitcoin and other digital currencies. As such, the market remains largely HODLer dominated as sentiment shifted from loss realization to modest profit-taking.

At the same time, activity in Bitcoin’s network has been a bit shaky in the past few days. According to Glassnode, the number of transactions per day has declined to about 225k. This is the same level of activity since the bear market that happened in 2019.

BTC/USD Forecast

The BTC/USD pair has been in a strong bearish trend in the past few weeks. As a result, the pair has managed to move below the 50% Fibonacci retracement level on the four-hour chart. The pair has also fallen below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved below the oversold level. The price has also dropped below the dots of the parabolic SAR.

Therefore, the pair will likely keep falling as bears target the key support at 38,000. On the flip side, a move above 42,000 will signal that there are still more buyers left in the market and invalidate the bearish view.

The pair will likely keep falling.

Bearish View

• Set a sell-stop at 1.300 and a take-profit at 1.2950.
• Add a stop-loss at 1.3100.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.3050 and a take-profit at 1.3100.
• Add a stop-loss at 1.300.

The GBP/USD crawled back slightly on Monday morning as investors position themselves for a busy week. The pair rose to a high of 1.3035, which was slightly higher than last week’s high of 1.2982.

UK and US Economic Data

The GBP/USD pair has been in a strong bearish trend in the past few weeks as investors worry about the ongoing market risks. The sell-off accelerated when the Federal Reserve published hawkish minutes. The minutes showed that the bank was committed to deliver more rate hikes and start a period of quantitative tightening.

This week, the focus will be on important economic data from the United States and the United Kingdom. On Monday morning, the Office of National Statistics (ONS) will publish the latest manufacturing and industrial production numbers. Economists expect the data to show that the two sectors rose slightly in February this year. The ONS will also publish the latest GDP numbers.

The next important numbers will come out on Tuesday when the UK will publish the latest employment numbers. Data published in March revealed that the UK unemployment rate declined to 3.9% while the economy has been adding more jobs. The key number to watch will be trends in wage growth.

The most important data from the UK will be the latest consumer price index (CPI) that are scheduled on Thursday. Economists expect the data to show that the country’s inflation rose from 6.2% in February to 6.7% in March. The core CPI, on the other hand, is expected to have risen from 5.2% to 5.4%. These numbers will provide signals of the next actions by the Bank of England.

The US will also release its inflation data on Wednesday. Economists expect that the country’s inflation jumped to a multi-decade high of 8.5% while core CPI rose from 6.4% to 6.6%.

GBP/USD Forecast

The GBP/USD pair managed to move below the symmetrical triangle pattern shown in pink. This was a sign that bears were taking over. The pair then managed to move below the important support at 1.3047, which was the lowest level on March 9th. It seems to be attempting to do a break and retest pattern, where it will retest this level.

The pair also moved below the 25-period and 15-period exponential moving averages. Therefore, the pair will likely keep falling. This will be confirmed if it moves below last week’s low at 1.2980.

The pair will likely keep falling as bears target the next key support level at 1.3050.

Bearish View

• Sell the GBP/USD and set a take-profit at 1.3150.
• Add a stop-loss at 1.3180.
• Timeline: 2 days.

Bullish View

• 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.

GBP/USD Forecast

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.