GBP/USD – The Cable Pair Looks Overbought in Anticipation of Latest Inflation Data From the US.
Bearish View
- Take Profit: 1.2000
- Stop Loss : 1.2300
- Timeline: 1-2 days
Bullish View
- Buy Stop : 1.2215
- Take Profit: 1.2300
- Stop Loss : 1.2100
The cable pair did make a strong comeback with traders anticipating a change in the rate policy of Fed and BoE. The sharp drop in the bond yields of UK and US also caused the pair price to rise hitting 1.2200. Some significant events that took place for the British economy was the acquisition of Silicon Valley Bank’s UK branch by HSBC. There were similar developments happening for SVB and Signature Bank in the US as well.
This added more fuel to the fear that the banking sector will take a toll from the aggressive rate hikes that has been happening for a fairly long time. In other news, several analysts are expecting the inflation to slip to the 2% target levels set by BoE by the end of the year. We can expect some action with the UK job numbers release. The pair price will also respond to the US inflation data release which you need to watch out for.
On the charts, we could see the RSI moving to the overbought level. The price initially rose crossing the key resistance seen in green, moving to the peak price since 3rd Feb. The price has also moved above the 50-period MA and the ADX is drifting near 40. The traders could try to retest the 1.2000 level, descending trend line with the SL placed at 1.2275. This sell position looks to be an ideal one as we expect the bearish trend returning for the pair.
