There is a likelihood that the pair will continue rising as bulls target the next key resistance level at 1.3250.
Buy the GBP/USD and add a take-profit at 1.3250.Add a stop-loss at 1.3100.Timeline: 1-2 days.
Set a sell-stop at 1.3150 and a take-profit at 1.3100.Add a stop-loss at 1.3200.
The GBP/USD pair rose cautiously as the recent strong sell-off took a breather. The pair is trading at 1.3170, which is higher than this week’s low of 1.3082.
US Inflation Data Ahead
The GBP/USD pair has been in a strong sell-off in the past few days as concerns about Ukraine remain. There are concerns that the UK economy will be hit after the recent sanctions on some of the wealthiest Russians. Most of the oligarchs have invested heavily in several sectors in the UK like real estate, finance, and retail.
There will be no major economic data from the UK on Thursday. Therefore, investors will focus on the upcoming American inflation data. Economists polled by Reuters expect the data to show that consumer prices in the US held steady in February.
Precisely, they expect that the headline consumer price index rose from 7.5% in January to 7.9% in February. If they are accurate, this will be the biggest increase in inflation since the 1980s.
Excluding the volatile food and energy prices, analysts expect the data to show that core inflation dropped slightly from 6.0% to 5.9%.
Still, the biggest worry among traders, Americans, and policymakers is not February’s inflation data. The focus is on what will come after Russia invaded Ukraine. In the past two weeks, the price of natural gas has risen close to a record while the crude oil price has moved to the highest point in over 14 years. Gasoline price is averaging at over $4 per gallon.
Other commodity prices have surged as well. For example, wheat has risen to an all-time high while metals like palladium and platinum that are important in the automobile industry have also risen. Therefore, the Fed and the Bank of England are in a difficult place because they need to raise rates without affecting the economic recovery.
The four-hour chart shows that the GBP/USD pair has cautiously bounced back in the past few hours. The pair is trading at 13166, which is slightly above this week’s low of 13082. On the four-hour chart, the pair remains below the 25-day and 50-day moving averages. It is also at the important resistance level, which was the lowest level on December 20th last year.
Therefore, there is a likelihood that the pair will continue rising as bulls target the next key resistance level at 1.3250.