Consolidation phase continues. Buy at 1.2725, sell at 1.2645. Focus on US/UK data and central bank actions; technicals indicate tight range trading.

Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.2725.
• Add a stop-loss at 1.2600.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 1.2645 and a take-profit at 1.2585.
• Add a stop-loss at 1.2725.

(Click on image to enlarge)

The GBP/USD exchange rate rose slightly after the relatively mixed economic numbers from the US and UK. The pair rose to the important resistance point at 1.2650, which was a few points above last Friday’s low of 1.2600.

US and UK economic numbers

The GBP/USD pair rose gradually after the UK published better-than-expected economic numbers. In a report, Nationwide said that the house price index (HPI) rose by 0.7% in February, higher than the expected 0.2%.

House prices rose by 1.2% on a YoY basis after crashing by 0.2% in the previous month. This increase was also better than the median estimate of 0.7%. Halifax will next publish its estimate on Monday.

Another report by S&P Global showed that the manufacturing PMI rose from 47.0 in January to 47.5 in February. This increase was also higher than the estimated 47.1. While this was an improvement, the figure remained below the expansion zone of 50.

The same trend happened in the US, where the Biden administration has provided billions of dollars in manufacturing incentives. A report by the ISM revealed that the manufacturing PMI dropped from 49.1 to 47.8.

However, on a positive side, a separate report by S&P showed that the PMI increased from 50.7 to 52.2. These numbers came a few days after the US released weak consumer confidence and durable goods order data.

Consumer confidence has been in a downward trend in the past few months, a move that could impact the economy. That’s because consumer spending is the biggest contributor to the US economy.

There will be no important economic numbers from the US on Monday. Therefore, focus will be on Tuesday’s services PMI report followed by Wednesday’s ADP jobs data. The most important data will be Friday’s non-farm payrolls (NFP) report.

GBP/USD technical analysis

The GBP/USD exchange rate has remained in a tight range recently as traders assess the next actions by the Federal Reserve and the Bank of England. Most analysts expect that the two will start cutting rates in the next few months if inflation continues falling.

The pair was trading at 1.2655 on Monday, a few points above last Friday’s low of 1.2600. It is also a few points above the key support point at 1.2610, its lowest swing in December and January. The three lines of the Bollinger Bands have all narrowed while the Percentage Price Oscillator (PPO) have retreated.

Therefore, the pair will likely remain in this channel ahead of the US jobs numbers. The key support and resistance levels to watch will be at 1.2600 and 1.2725.