Technical data

British pound outlook ahead of UK houses data

GBP/USD remaining in a tight range.

Bullish view

  • Buy the GBP/USD pair and set a take-profit at 1.2670.
  • Add a stop-loss at 1.2520.
  • Lead time: 1-2 days.

Bearish view

  • Set a sell stop at 1.2535 and a take-profit at 1.2490.
  • Add a stop-loss at 1.2600.

GBP/USD remained in a consolidation phase as investors reacted to the political situation in the UK. The British Pound is trading at 1.2587, which was above this week’s low of 1.2437. It is around 3.50% above the May low.

Advertising

Sterling continues to consolidate

GBP/USD remained rangebound on Tuesday as the UK parliament failed to impeach Boris Johnson. Conservative members did not have the 180 votes required to impeach him.

This means he will not face another indictment within the next 12 months. In a statement, Johnson promised to continue to serve as prime minister and to implement his plans. The pair showed no major moves as the vote was in line with what analysts expected.

The pair will likely stay within this range on Wednesday as there are no major economic events expected. The only important data to watch will be Halifax’s UK house price estimate. Based on Nationwide’s previous estimate, analysts believe prices began to stabilize in May as mortgage rates rose.

GBP/USD is also moving sideways as US bond yields retreat. The 10-year yield fell to 2.977% while the 30-year yield fell from 1.85% to 3.13%. The spread between 10-year and 2-year bond yields remained unchanged.

This price action is likely due to investors waiting for the next US inflation data. The country’s inflation is expected to remain near its highest level in 40 years, although it has started to peak.

A sign of this is that some retailers will be forced to lower prices due to high inventories. On Tuesday, Target said it would begin lowering some prices in the coming weeks because it bought too much product to prepare.

GBP/USD Forecast

The four-hour chart shows that the GBP/USD pair has been in a tight range for the past few days. It managed to hit a high of 1.2590, slightly above this week’s low of 1.2438. It also broke through the 25 and 50 day moving averages and is approaching the important resistance level at 1.2666.

The Money Flow Index (MFI) moved closer to the neutral 50 level. Therefore, the pair is likely to continue higher as bulls target the key resistance level at 1.2670.

GBPUSD