The GBPUSD currency pair is forming an uptrend

06 June 2023 158
The GBPUSD currency pair is forming an uptrend


The price of the GBPUSD currency pair remains above the level of 1.2400 since the dollar got support from stronger-than-expected employment figures last week.

 

Business activity in the U.S. service sector declined in May, along with manufacturing orders. The decline in these indicators raises the possibility of a pause in the Federal Reserve's interest rate hike cycle next week.

 

The U.S. ISM Services Business Activity Index fell short of expectations in May, falling to 50.3 from 51.9 in April.

 

Some analysts see this index as the Fed's preferred indicator of inflation. Service prices tend to be more resilient and respond less to rising interest rates.

 

According to the CME FedWatch Tool, traders pegged the chances of the Fed pausing its interest rate hikes at its June meeting at 78%.

 

As for the UK, the S&P Global Services PMI and Composite PMI both beat forecasts. Meanwhile, the Services Business Activity Index was 55.2, beating forecasts of 55.1 but below April's 55.9. This has contributed to higher store prices in recent months. High inflation rate will force the Bank of England to tighten policy further.

 

Today the Business Climate Index in the UK construction sector is going to be released. A slight decline in the indicator is expected. Any deviation from the forecast may increase the volatility of the British pound.

 

Beyond the downward correction on the H4 timeframe there are good prospects for the price to change the trend.

 

On the hourly timeframe the prices are supported by the uptrend line. The RSI (standard values) has moved out of the overbought zone, indicating a possible price decline to trend support.

 

Signal:

The short-term outlook for the GBPUSD pair is to buy around the level of 1.2390. 

The target is at the level of 1.2540.

Part of the profit should be fixed at the level of 1.2450.

A stop-loss should be placed at the level of 1.2320.

The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.

This content is for informational purposes only and is not intended to be investing advice.

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