The GBPUSD currency pair price pulled back from Friday's high of 1.3142.
The US figures on retail sales for June, published earlier this week, were lower than the experts’ estimates. The data had a negative impact on Treasury bond yields and the US dollar rate.
Despite the fact that the volume of retail sales in the country did not meet the expectations of traders, basic consumer spending data were high due to the tight situation in the labor market.
The dynamics of the American currency was negative due to the decline in inflation rates in the US and the publication of weak data on retail sales. Investors bet the Fed will pause interest rate hikes, and it puts pressure on the dollar.
On Tuesday, major US banks highlighted the benefits of quantitative tightening. Margin rose in the second quarter, causing stocks to rise. However, lower consumer spending slowed loan growth and increased the costs of holding deposits.
According to the CME FedWatch Tool, there is a 99% chance of a rate hike at the regulator's next meeting (July 25–26). At the same time, the market is forecasting a subsequent interest rate cut starting in mid-2024.
The UK consumer price index data were released today. Inflation fell to the level of 7.9% per annum, which is very different from the previous value of 8.7%. The market reacted not in favor of the British pound.
The GBPUSD price is in an uptrend on the H4 timeframe.
In terms of wave analysis, the price is forming the fourth descending wave. The GBPUSD price is approaching the top of the first wave at 1.2848. This may negate the downside potential of the current wave.
The Stochastic Oscillator indicator (standard values) confirms the possibility of a reversal of the current short-term trend after the moving line travels out of the oversold zone.
The transition of the descending fourth wave to the ascending fifth wave in the range of 1.2850–1.2970 is expected.
Signal:
The short-term outlook for the GBPUSD pair is to buy.
The target is at the level of 1.3215.
Part of the profit should be fixed near the level of 1.3050.
A Stop-loss should be placed at the level of 1.2740.
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.
