GBP/USD Forex signal: likely to fall towards 1.3600
The pair will likely resume the downtrend as sellers target support at 1.3600.
- Sell the GBP/USD and set a take-profit at 1.3600.
- Add a stop-loss at 1.3750.
- Deadline: 1 day.
- Set a buy-stop at 1.3700 and a take-profit at 1.3800.
- Add a stop-loss at 1.3600.
GBP/USD attempted to rally on Monday as concerns over the Boris Johnson administration persisted. The pair is also stable ahead of key UK economic data due later this week. It is trading at 1.3680, slightly above last Friday’s low of 1.3655.
Key economic data
GBP/USD has struggled in recent days as political concerns remain. Investors are worried about a leadership crisis after Boris Johnson was accused of ignoring Covid-19 rules in December 2020.
While the Prime Minister sent a message of apology to the Queen last week, many in his party believe he will not complete his current term. As a result, political challenges in the country are causing concern.
These challenges come at a time when the UK is set to enter Brexit negotiations with the European Union. These talks focus on the growing crisis in Northern Ireland. The UK wants to resolve the crisis and has warned it could trigger Article 16 if it does not get its wish.
Meanwhile, investors are preparing for a busy week in which the Office for National Statistics (ONS) will release the latest employment, inflation and retail sales figures.
The ONS will release the latest employment figures on Tuesday. Economists expect data to show the UK’s unemployment rate held steady at 4.2% in November as the country battled the novel Covid-19 crisis. They also expect data to show the economy added more than 128,000 jobs in the three months to November.
Additionally, analysts expect data to show the country’s inflation rose from 5.1% in November to 5.2% in December. This will be a number above the BOE’s 2.0% target. Consequently, analysts expect the bank to sound hawkish in the coming weeks.
The four-hour chart shows that the GBP/USD pair has been in a strong uptrend for the past few weeks. It rose about 4% above the December low. It rose above the ascending trendline shown in black.
The pair also moved above the 50-day moving average. Also, it is slightly below the 25-day moving average while the Relative Strength Index (RSI) has broken below the overbought level. Therefore, the pair will likely resume the downtrend as sellers target support at 1.3600.