In the event of a downward trend
- Take a sell trade for the GBP/USD currency pair and set the Take Profit order at 1.1800.
- Set the stop loss order at 1.1975.
- Schedule: a day or two.
In the case of an upward trend
- Set the buy stop order at 1.1935 and the take profit order at 1.2000.
- Set the stop loss order at 1.1850.
The GBP/USD sell-off gained strength during the US and Asian sessions as the US dollar’s strength continued. The pair fell to the lowest level at 1.1880, the lowest level since 2020. It collapsed about 12% in 2022.
UK Economic Forecasts
The British pound fell against the US dollar as the outlook for the British economy worsened. On Monday, several unions representing railway workers announced that they would strike soon. This would be the biggest strike in more than 25 years and affect train passengers across the UK. Workers protest low wages amid rising inflation.
The UK government has asked the unions to come back to the negotiating table and come to an agreement. At the same time, groups representing railway companies urged their workers not to strike. Other unions, especially those representing postal workers, have warned of a major strike.
These strikes will affect the country’s economy at a difficult time when inflation has risen to its highest level in more than four decades. Home prices rose while retail sales fell. Consumer confidence has fallen to its lowest level in more than a decade.
The pound sterling has also fallen against the US dollar The strength of the US dollar continues on a large scale. The closely watched US dollar index rose to $106 as the currency rose against both developed and emerging market currencies. The index rose as investors reacted to strong labor market data.
On Friday, data published by the Bureau of Labor Statistics (BLS) showed that the economy added more than 372,000 jobs in June while the unemployment rate remained at 3.7%. While the participation rate remains low, analysts expect the Fed to continue to tighten policies in the coming months.
The next major catalyst for the GBPUSD will be the upcoming US consumer inflation data. Analysts expect inflation to jump to 8.8% in June.
GBP/USD trading forecast
The 4 hour chart shows that the GBP/USD has been on a strong bearish trend in the past few months. More recently, it has formed an inverted cup and a handle pattern that appears in black. With a dip in the evening session, the pair was able to move down the underside of the cup. It has also moved below the 25-day and 50-day moving averages.
Therefore, the pair is likely to continue falling as sellers target the next psychological level at 1.1800. Movement above the resistance point at 1.1950 will invalidate the view to the downside.