The GBP/USD price continued rising as investors reflected on the new administration in the UK.
Buy the GBP/USD pair and set a take-profit at 1.1850.Add a stop-loss at 1.1500.Timeline: 1-2 days.
Set a sell-stop at 1.1525 and a take-profit at 1.1450.Add a stop-loss at 1.1625.
The GBP/USD price continued rising as sentiment over Rishi Sunak’s government. It rose to a high of 1.1613, which was the highest level since September 13. It has risen by more than 12% from its lowest level this month, making sterling the best-performing G10 currency.
BoE and Fed decisions ahead
The GBP/USD price continued rising as investors reflected on the new administration in the UK. Rishi Sunak is expected to be more fiscally sound than Liz Truss. In November, he will talk about his plans to fill a 40 billion pound fiscal hole left by Truss.
Sunak’s government has been supported by falling energy prices. Gas prices to a five-month low last week because of full gas storage and a forecasted warmer winter. Still, analysts expect that inflation will remain at an elevated level in the coming months.
On Monday, the GBP/USD pair will react mildly to the latest Nationwide house price index (HPI) data. Economists expect that the HPI declined again in October as mortgage rates continued rising. Still, house prices are still at an elevated level. The Bank of England will also publish the latest mortgage data for September.
The biggest catalysts for the pair will be the upcoming Fed and Bank of England (BoE) interest rate decisions. Economists expect that the Fed will hike interest rates by another 0.75% as it continues to battle the elevated inflation. Investors will read the Fed statement to find any signs of a pivot.
The GBP/USD price will also react to the latest decision by the BoE. Economists expect that the bank will hike rates by another 0.75% to 3%. The BoE has been extremely hawkish this year as inflation has remained at an elevated level. It expects that inflation will rise to about 13% in the coming days.
The four-hour chart shows that the GBP/USD pair has been in a strong bullish trend in the past few weeks. It managed to move above the important resistance level at 1.1500, which was the highest level on October 15. It also made a break and retest pattern and moved slightly above all moving averages. It is also above the ascending trendline shown in blue.
Therefore, the pair will likely continue rising as buyers target the third resistance level at 1.1850. A drop below the support at 1.1500 will invalidate the bullish view.