GBP/USD Forex Signal Flips Key Resistance August 13 Chart

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The world of forex trading is always abuzz with activity, and one of the most closely watched currency pairs is the GBP/USD. Recently, this pair has been making headlines as it has flipped a key resistance level, leaving traders and investors eager to know what’s next. In this article, we’ll delve into the details of this significant move, explore the factors driving it, and provide insights into what traders can expect in the coming days.

Understanding the GBP/USD Pair

The GBP/USD pair, also known as the “cable,” is one of the most widely traded currency pairs in the world. It represents the exchange rate between the British pound (GBP) and the United States dollar (USD). This pair is particularly sensitive to economic indicators, monetary policy decisions, and geopolitical events that affect either the UK or the US. As such, it’s a favorite among traders who enjoy the thrill of riding market waves.

The Recent Move

On August 13, the GBP/USD pair jumped to a high of 1.3525, marking a significant rebound from last week’s low of 1.3143. This move was largely driven by the US Dollar Index (DXY) retreating to a two-month low after the latest US inflation data. The headline consumer price index (CPI) remained unchanged at 2.7%, while the core figure rose from 2.9% to 3.1% during the month. These numbers were not as high as analysts had expected, leading to a decrease in the value of the US dollar.

[Image: A chart showing the recent move of the GBP/USD pair]

Federal Reserve Interest Rate Bets

The recent inflation data has also led to a surge in bets that the Federal Reserve will cut interest rates in the coming meeting in September. The CME Fed Rate monitor tool shows that the odds of a 0.25% cut in September rose to over 90%. This is a significant development, as a rate cut would bring the official cash rate from the current range to between 4% and 4.25%. Such a move would likely weaken the US dollar further, potentially boosting the GBP/USD pair.

Trading Strategies

For traders looking to capitalize on this move, here are two possible strategies:

• Bullish view: Buy the GBP/USD pair and set a take-profit at 1.3600. Add a stop-loss at 1.3400. This strategy is based on the assumption that the pair will continue to rise as bulls target the psychological point at 1.3600.
• Bearish view: Sell the GBP/USD pair and set a take-profit at 1.3400. Add a stop-loss at 1.3600. This strategy is based on the assumption that the pair will drop below the support at 1.3430, invalidating the bullish outlook.

[Image: A chart showing the bullish and bearish views]

Technical Analysis

From a technical perspective, the daily chart shows that the GBP/USD pair has formed a bullish engulfing pattern, which consists of a big bullish candle that follows and covers a small bearish candle. The pair has also moved above the 23.6% Fibonacci Retracement level at 1.3388 and the key resistance level at 1.3431, the highest swing on September 26. Additionally, it has jumped above the 50-day and 100-day moving averages.

[Image: A chart showing the technical analysis]

Key Drivers

Looking ahead, the next important drivers for the GBP/USD pair will be the upcoming mortgage data and statements by some Fed officials like Austan Goolsbee, Raphael Bostic, and Tom Barkin. These events have the potential to influence the pair’s direction, and traders should keep a close eye on them.

Conclusion

In conclusion, the GBP/USD pair has flipped a key resistance level, and traders are eagerly watching to see what’s next. With the Federal Reserve’s interest rate decision looming, the pair’s direction will likely be influenced by the outcome. Whether you’re a bullish or bearish trader, it’s essential to stay informed and adapt to the changing market conditions. As the saying goes, “the trend is your friend,” so make sure to ride the waves and capitalize on the opportunities that arise.

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About the author: 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.

[Image: A chart showing the GBP/USD pair’s potential future moves]