GBP/USD Forex Signal: Bullish Engulfing Points

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  • Buy GBP/USD and set take-profit at 1.1600.
  • Add a stop-loss at 1.1400.
  • Deadline: 1 day.

Bearish view

  • Set a sell stop at 1.1450 and a take-profit at 1.1350.
  • Add a stop-loss at 1.1520.

GBP/USD fell slightly after hitting its lowest level since 1985. The pair fell to a low of 1.1408, around 7.28% below its August high. It then pulled back slightly during the overnight session after the Fed released its Beige Book. UK economic outlook darkens

GBP/USD price has seen a strong sell off over the past few weeks as investors worry about the UK economy. Analysts say the country risks a major recession in the coming months as the energy crisis continues.

Lizz Truss, the new British Prime Minister, is expected to launch a major stimulus package to offset soaring petrol prices. Analysts expect the cost of this spending to exceed £200bn. As a result, there are fears that such spending could significantly widen the budget deficit at a time when the Bank of England (BoE) is expected to continue raising interest rates.

Meanwhile, GBP/USD edged higher after the Fed released its Beige Book. The report warns that the economy will slow in the coming months. He nevertheless hinted that inflation will continue to decline in the short term. The statement added:

“Prospects for future economic growth remained generally weak, with contacts noting expectations of further easing in demand over the next six to twelve months.”

There will be no economic data from the UK on Thursday. Therefore, the GBP/USD pair will react to any news from the new UK administration. The other key catalyst will be a statement from Jerome Powell. In it, he will likely reiterate that the Fed will continue to raise interest rates in the months ahead.

This view will be consistent with what the Fed’s Rael Brainard said on Wednesday. In an interview with the Financial Times, she said more hikes are needed in the coming months. As a result, analysts expect the bank to rise 0.75% in September. GBP/USD forecast

GBP/USD crashed to its lowest level since 1985 on Wednesday. It then rebounded slightly as the US dollar retreated slightly. On the four-hour chart, it has formed a bullish engulfing pattern, which is usually a positive sign.

The pair broke below the standard pivot point and the 25 and 50 day moving averages. Therefore, the pair will likely continue higher as buyers target the next key resistance level at 1.1600.

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