The pair will likely resume the downward trend as sellers target the support at 1.3600.
Bearish View
- Sell the GBP/USD and set a take-profit at 1.3600.
- Add a stop-loss at 1.3750.
- Timeline: 1 day.
Bullish View
- Set a buy-stop at 1.3700 and a take-profit at 1.3800.
- Add a stop-loss at 1.3600.
The GBP/USD pair attempted to make a comeback on Monday as concerns about the Boris Johnson administration remained. The pair is also steady ahead of key economic data from the UK scheduled for later this week. It is trading at 1.3680, which was slightly above last Friday’s low of 1.3655.
Key Economic Data
The GBP/USD pair has struggled in the past few days as political concerns remain. Investors are concerned about a leadership crisis after Boris Johnson was accused of ignoring Covid-19 rules in December 2020.
While the prime minister sent an apology message to the queen last week, many people in his party believe that he will not finish his current term. As a result, there are concerns about political challenges in the country.
These challenges are coming out at a time when the UK is about to start Brexit negotiations with the European Union. These talks are about the growing crisis in Northern Ireland. The UK wants to resolve the crisis and has warned that it could trigger Article 16 if it does not get its wish.
Meanwhile, investors are bracing for a busy week in which the Office of National Statistics (ONS) will publish the latest employment, inflation, and retail sales numbers.
The ONS will publish the latest jobs numbers on Tuesday. Economists expect the data to show that the UK unemployment rate held steady at 4.2% in November as the country battled the new Covid-19 crisis. They also expect the data to show that the economy added over 128k jobs in the three months to November.
Additionally, analysts expect the data to show that the country’s inflation rose from 5.1% in November to 5.2% in December. That will be a bigger number than the BOE target of 2.0%. Therefore, analysts expect that the bank will sound hawkish in the coming weeks.
GBP/USD Forecast
The four-hour chart shows that the GBP/USD pair has been in a strong bullish trend in the past few weeks. It has risen by about 4% above the lowest level in December. It has risen above the ascending trend line that is shown in black.
The pair also moved above the 50-day moving average. Also, it is slightly below the 25-day moving average while the Relative Strength Index (RSI) has moved below the overbought level. Therefore, the pair will likely resume the downward trend as sellers target the support at 1.3600.
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