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GBP/USD Forex Signal: Could Retest the Support at 1.1920 – 21 February 2023

The GBP/USD pair moved sideways on Monday and Tuesday. It has remained slightly above the key resistance level at 1.2000.

Bearish view

Set a sell-stop at 1.2000 and a take-profit at 1.1915.Add a stop-loss at 1.2100.Timeline: 1 day.

Bullish view

Set a buy-stop at 1.2050 to 1.2150.Add a stop-loss at 1.1950.

The GBP/USD pair remained in a consolidation phase on Tuesday morning as investors focused on Brexit and the upcoming economic events. It was trading at 1.2035, where it has been in the past two days. This price was a few points above last week’s low of 1.1920.

New Brexit deal

Brexit is back in the limelight as UK’s prime minister works to reach a deal with the European Union on Northern Ireland protocol. Rishi Sunak aims to solve an issue that has existed since the UK left the European Union. The challenge deals with how Northern Ireland, which is a part of the UK, should trade with Great Britain.

Rishi Sunak has continued to deliberate with other Tory leaders and there is a possibility that a deal will be reached in the coming days. Analysts believe that the deal will help solve one of the biggest issues that has plagued Brexit.

There will be several important economic data from the UK and the US on Tuesday although their impact on the pair will be minimal. In the UK, S&P Global will publish the flash manufacturing and services PMI numbers.

Economists believe that the two made some improvements in February, with the services figure nearing the expansion area of 50. Manufacturing PMI is expected to come in at 47.5. The UK will also publish the latest vehicle sales numbers.

In the US, the S&P will also publish the flash PMI numbers. Like in the UK, analysts expect that the two sectors remained in a contraction stage in February but made some improvements. The other important data is existing home sales, which are expected to show that sales rose modestly in January as mortgage rates pulled back slightly.

GBP/USD forecast

The GBP/USD pair moved sideways on Monday and Tuesday. It has remained slightly above the key resistance level at 1.2000. The pair has moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the neutral point at 50. At the same time, the Stochastic Oscillator has moved to the overbought level.

It has formed what looks like a head and shoulders pattern. Therefore, the pair will likely have a bearish breakout as sellers target last week’s low of 1.1917. However, a move above the 50-period moving average at 1.2096 will invalidate the bearish view.

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