Pound Set to Retest the 1.300 Support

The pair will likely resume the bearish trend as sellers target the horizontal line shown in purple at 1.300.

Bearish View

• Sell the GBP/USD and set a take-profit at 1.300.
• Add a stop-loss at 1.3120.
• Timeline: 1 day.

Bullish View

• Set a buy-stop at 1.3070 and a take-profit at 1.3135.
• Add a stop-loss at 1.3000.

The GBP/USD price was unchanged in the Asian session in a relatively calm week in the UK. The pair is trading at 1.3053, where it has been in the past few days. This price is about 1.9% below its highest level in March this year.

US Dollar in Focus

The GBP/USD pair has had a mixed week because of the limited economic data from the United Kingdom. Last week, the Office of National Statistics (ONS) published the most important numbers for the UK economy.

For example, on Monday, the agency published relatively mild GDP numbers. The data revealed that the economy barely grew in January. On the following day, the agency released the latest jobs numbers that revealed that the unemployment rate has dropped to where it was before the pandemic started.

The ONS then released the strong consumer and producer inflation numbers. In total, these numbers have jumped to the highest level in years.

Therefore, with these numbers, investors have already predicted the next action by the Bank of England. The bank is expected to be a bit cautious about its rate hikes although the hawkish sentiment will remain.

The GBP/USD price action is mostly because of the US dollar. The currency jumped sharply this week as bond yields rose to multi-year highs. The dollar index moved to $101 for the first time in years.

In the past two days, however, the situation has changed as the bond yield rally eases and as dollar holders start to take profits. On Wednesday, the US published weak existing home sales. The data revealed that sales dropped from 5.93 million in February to about 5.73 million in March. This 2.7% decline happened as other data showed that the 30-year mortgage rate rose to 5.2%. The next key catalyst will be the upcoming speech by Jerome Powell.

GBP/USD Forecast

The GBP/USD pair has gone nowhere in the past few days. It has risen to a high of 1.3055, which was slightly above last week’s low of 1.2971. The pair is hovering along the 25-period and 50-period moving averages while the MACD has moved slightly above the neutral level. It is also below the descending trendline shown in black.

Therefore, the pair will likely resume the bearish trend as sellers target the horizontal line shown in purple at 1.300.