Bullish View
Bearish View
The pound to US dollar exchange rate saw a rebound on Friday following news that Iran’s foreign minister is likely visiting Pakistan, which raises the possibility of discussions with the United States. On Monday, the trading price was noted at 1.3530 as investors keep an eye on impending interest rate decisions from the Bank of England (BoE) and the Federal Reserve.
Federal Reserve and Bank of England Decisions
The GBP/USD currency pair is under scrutiny, given the decreasing chances of a US-Iranian agreement. President Trump is hopeful about a second round of negotiations; however, the Iranian response has been rather dismissive.
As a consequence, oil prices might continue to climb, especially with the Strait of Hormuz facing blockage from both Iran and the US. This crucial waterway accounts for around 20% of global oil shipments, and there’s a looming threat that Iran could cut off access in the Red Sea if hostilities escalate.
Attention will soon shift to upcoming US macroeconomic data, including consumer confidence, the Q1 GDP report, and housing-related figures. These will shed light on the US economic health amidst ongoing conflicts.
Significantly, both the Federal Reserve and the Bank of England are set to announce their interest rate decisions later in the year. Predictions suggest the Federal Reserve will maintain its rates between 3.50% and 3.75%.
With inflation holding steady, the GBP/USD pair will also be influenced by any potential stability in BoE rates. A report from last week indicated that economic growth rose by 3.3% in March, alongside climbing oil and gas prices. Analysts believe inflation rates will remain consistent for the remainder of the year.
GBP/USD Technical Analysis
Observations from the daily chart illustrate that the GBP/USD pair has been on an upward trajectory recently, climbing from a March low of 1.3162 to its current standing at 1.3530.
The price has surpassed a significant support level at 1.3475, which previously marked highs on March 10 and 23. It’s also trading above the 50-day exponential moving average (EMA).
On a positive note, the formation of an inverted head-and-shoulders pattern suggests a bullish reversal in technical analysis terms. Additionally, the super trend indicator has exceeded, reinforcing this sentiment.
This implies that the pair could continue its ascent, with bulls targeting this month’s high of 1.3600. Should the price surpass this mark, further short-term gains might follow. Conversely, if it dips below the support level of 1.3500, this bullish outlook would be challenged.
