Bullish view
Bearish view
The GBP/USD exchange rate rose slightly on Tuesday, even as crude oil prices jumped amid the US-Iran concerns. It also steadied as investors waited for the latest Federal Reserve and Bank of England (BoE) interest rate decisions. It was trading at 1.3540, a few points above last week’s low of 1.3450.
Federal Reserve and Bank of England Interest Rate Decisions
The GBP/USD pair rose as crude oil prices jumped, with Brent and the West Texas Intermediate (WTI) rising to $108.65 and $96 as the ceasefire between the two sides continued.
The soaring energy prices will take center stage this week as the Federal Reserve and Bank of England (BoE) deliver their interest rate decisions.
Economists expect the two central banks to maintain interest rates unchanged in these meetings. In the Federal Reserve’s case, it is expected to leave rates between 3.50% and 3.75% in Jerome Powell’s final meeting as the Fed Chair.
Officials will justify the rate decision noting that they need more time to observe the impact of the war on the economy. The most recent report showed that the headline CPI rose to 3.3% in March from the previous 2.3%.
This inflation will likely continue rising as crude oil and natural gas prices have remained elevated. Data compiled by AAA shows that the average gas price rose to $4.10.
The GBP/USD pair will also react to the Bank to England decision on Thursday this week, with officials expected to leave rates at 3.75%.
The other top macro data to watch this week will be the US consumer confidence report on Tuesday and the GDP report on Thursday this week.
GBP/USD Technical Analysis
The daily chart shows that the GBP/USD pair has held steady in the past few days. It has moved to 1.3540, a few points above the key support level at 1.3445.
It has held steady above the 50-day Exponential Moving Average (EMA). Also, it is slowly forming a bullish flag pattern, which is made up of a vertical line and a descending channel.
The pair has formed an inverted head-and-shoulders pattern, a common bullish reversal sign in technical analysis. It has also moved above the Supertrend indicator.
Therefore, the pair will likely have a strong bullish breakout in the coming days, potentially to the key target at 1.3600. A move above that level will point to more gains, potentially to the psychological level of 1.3700.
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.
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