GBPUSD growth wave is nearing completion

27 February 2024 87
GBPUSD growth wave is nearing completion

The GBPUSD currency pair ended Monday with growth for the fifth consecutive trading session, which is the best result in 2024. The bulls are likely to start taking profits in the near future, especially given the price approaching the strong resistance zone of 1.275-1.279. The sideways trend, within which GBPUSD has remained for most of the time since mid-December, does not provide an opportunity for a more significant price rise. Once the correction starts, the price may quickly drop to the 1.262 level.

 

Economic data that have been released in the UK since the beginning of the week point to the worsening weakness of the national economy. The number of job openings fell by 15% year-on-year to less than 870,000. This is the lowest since April 2021, and compared to the peak levels of recent years, the value of the indicator has fallen by more than a third. The statistics confirm the increasing cooling of the labor market.

 

The report of the British Retail Consortium (BRC) also shows stagnation in the country's economy. Shop price inflation slowed to 2.5% in February from 2.9% in January, the smallest annual increase since March 2022. Meanwhile, data from the Confederation of British Industry showed the slowest rate of growth in selling prices since May 2021. BRC chief Helen Dickinson said fierce competition for customers was forcing stores to hold current price levels.

 

Reuters analysts believe that the new statistics may change the Bank of England's position on the timing of the beginning of the rate cut cycle. Now the most probable date is August, but evidence of slowing inflation may shift the expectations of market participants closer to the beginning of summer. In this case, the Bank of England will start easing monetary policy at the same time as the Fed, and the pound will not benefit from the rate differential against the dollar.

 

On the daily chart of GBPUSD, the Stochastic indicator lines are getting closer to the overbought zone. The formation of a full-fledged sell signal can take place when the price rises to the range of 1.270-1.275. The mark of 1.262 will be the pullback target.

 


Consider the following trading strategy:


Sell GBPUSD in the range of 1.270-1.275. Take profit - 1,262. Stop loss - 1.279.


Traders may also use a Trailing stop instead of a fixed Stop loss at their discretion

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

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