The GBP to USD price pulled back as last week’s momentum faded.
Sell the GBP/USD pair and set a take-profit at 1.1360.Add a stop-loss at 1.1550.Timeline: 1-2 days.
Set a buy-stop at 1.1558 and a take-profit at 1.1650.Add a stop-loss at 1.1450.
The GBP/USD price pulled back slightly ahead of the upcoming Fed and BoE decisions. It dropped to a low of 1.1458, which was about 2% below the highest point last week. Still, this price is about 10% above the lowest level in September.
Fed and BoE decision
The GBP/USD price pulled back after the latest UK house price data. According to Nationwide, house prices declined by 0.9% in October as mortgage rates and inflation rose. The average price dropped to ?268,282 from the previous ?272,259. The annual rate dropped from 9.5% to 7.2%.
Economists believe that house prices will remain under pressure in the coming months. For one, more people are anxious about buying homes at a time when prices are falling and mortgage rates are rising. Additional data showed that mortgage approvals are falling, with only 66k approved in September. Mortgage rates have risen from 2.34% in December to 4.24% in September.
These numbers came two days ahead of the upcoming interest rate decision by the Bank of England (BoE). Economists expect that the bank will hike rates by another 0.75% in a bid to fight the soaring inflation.
The next important catalyst for the GBP/USD pair will be the upcoming Federal Reserve interest rate decision. Economists expect that the bank will deliver another 0.75% rate hike, bringing the year-to-date increases to 375 basis points.
The hawkish forecast was boosted by the latest American job openings and ISM manufacturing numbers that were published on Tuesday. According to the Labor Department, the number of vacancies increased from 10.2 million in August to over 10.7 million in September. That increase was higher than the median estimate of 10 million.
The manufacturing sector continued doing well as the PMI increased to 50.2 in October. A PMI reading of 50 and above is a sign that an industry is doing well.
The GBP to USD price pulled back as last week’s momentum faded. It dropped to a low of 1.445, which was lower than last week’s high of 1.1650. As it dropped, the pair managed to move below the important support level at 1.1500, which was the highest level on October 5.
It also moved slightly below the standard pivot point while the Stochastic Oscillator moved close to the oversold level. The GBP/USD pair will likely continue falling as sellers target the key support at 1.1300.