Bearish Outlook
- Sell the GBP/USD pair, targeting a profit at 1.3141.
- Set a stop loss at 1.3500.
- Timeframe: 1-2 days.
Bullish Outlook
- Buy the GBP/USD pair, aiming for a profit at 1.3500.
- Set a stop loss at 1.3141.
On Tuesday, GBP/USD held steady as traders awaited comments from Jerome Powell and other Federal Reserve officials. Currently, it sits at 1.3336 after reaching a high of 1.3725 in September.
Statements from Jerome Powell and Andrew Bailey
The GBP/USD pair lingered within a tight range as traders and investors looked forward to Powell’s commentary, his first since the US government shutdown commenced.
He is expected to provide insights into the U.S. economy’s condition and potential expectations for the upcoming meeting. Previously, he mentioned that a rate cut wasn’t assured, focusing on the ongoing inflation concerns.
Other Fed officials, including Michelle Bowman, Christopher Waller, and Susan Collins, will also impact the GBP/USD pair. Waller and Bowman, both appointed by Donald Trump, have been advocates for lower rates.
Additionally, Andrew Bailey, the Governor of the Bank of England, is anticipated to discuss the UK economy, which is facing stagflation.
Stagflation implies a mix of high inflation and sluggish growth. Recent data points to consumer inflation hitting 3.6% in September.
The GBP/USD pair will also react to UK employment data. According to the Office for National Statistics, analysts expect the unemployment rate to remain steady at 4.7% in August, with a drop of 8,000 in employment for September.
GBP/USD Technical Analysis
Looking at the daily chart, the GBP/USD pair has declined over the last few days, falling from a September high of 1.3727 to 1.3335. It has dipped below the 23.6% retracement level at 1.3390.
It has also encountered significant support at 1.3340, the neckline of a head-and-shoulders pattern, a well-known bearish reversal indicator in technical analysis.
This suggests the pair may continue its downward trend, with sellers aiming for the August lows around 1.3140, an important support level that coincides with the 38.2% retracement.
