GBP/USD – Preceding the Latest US Inflation Data, the Pair Seems to Have Crossed the Overbought Zone.
Short Position
- Take Profit: 1.2000
- Stop Loss : 1.2300
- Timeline: 1-2 days
Long Position
- Buy Stop : 1.2215
- Take Profit: 1.2300
- Stop Loss : 1.2100
Since speculators anticipated a shift in the rate policies of the Fed and BoE, the cable pair did make a solid rebound. The price of the pair climbed, reaching 1.2200 as a result of the steep decline in the UK and US bond yields. One important development for the British economy was HSBC’s purchase of Silicon Valley Bank’s UK branch. There have been some such implementations for SVB and Signature Bank in the US too.
This is just adding more to the concerns that the vigorous rate hikes that have been continuing for a considerable amount of time will impact the banking sector. In other news, many economists anticipate that the BoE’s 2% inflation goal will be reached before year end. We can expect some volatility with the upcoming UK employment data release too. The release of the US inflation figures will also significantly impact the price of the pair, which is something we need to pay attention to.
The Relative Strength Index was going towards overbought territory on the charts. The price initially increased, moving past the key resistance shown in green and reaching its highest point since February 3rd. The price has risen above the 50-period moving average, and the ADX is edging closer to 40. The traders can attempt to retest the falling trend line at the 1.2000 level with a stop loss set at 1.2275. A short trade would be the best course of action as we anticipate the pair resuming its downtrend.
