Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3650.
- Add a stop-loss at 1.3450.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3450.
- Add a stop-loss at 1.3650.
The GBP/USD pair continued its recent rally as the US dollar softened following the release of the weak consumer confidence and strong US GDP data. It rose to a high of 1.3515, up by over 3% from its November lows.
US Published Strong GDP Data
The GBP/USD pair continued its strong bull run after the US released the latest GDP data, which showed the economy remained resilient in the third quarter.
A report released by the Bureau of Economic Analysis showed the economy expanded by 4.3% in Q3 as consumer spending and data center spending accelerated.
However, more data released on Tuesday were not strong. For example, consumer confidence tumbled in November as jitters on inflation and the labor market accelerated.
At the same time, the country’s manufacturing and industrial production stagnated in October this year, meaning that the fourth quarter GDP data may not be as strong as expected.
The strong GDP data means that the Federal Reserve will not have the urgency to cut interest rates in 2026. However, there is a possibility that officials will continue cutting, especially if inflation continues falling as it did last month.
A recent report showed that the country’s inflation dropped to 2.6% in November this year. Another report showed that the unemployment rate jumped to 4.6% during the month. A combination of higher jobless rate and falling inflation means that the Fed has some motivation to slash rates.
The GBP/USD exchange rate will likely remain steady today because it is Christmas Eve. As such, the upcoming US jobless rate data will have no impact on the currency.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD pair continued rising as the US Dollar Index slipped. This rally means that the 50-day and 200-day Exponential Moving Averages have crossed each other, forming a golden cross pattern.
The RSI and the MACD indicators have continued rising, which is a sign of strong momentum.
Therefore, the pair will likely continue rising in the near term as bulls target the next key resistance level at 1.3650. A move above that level will point to more gains to the year-to-date high of 1.3788.
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Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.
