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GBP/USD Forex Signal: Double-Top Pattern Forms Ahead of FOMC Minutes – 17 August 2022


The pair will likely resume the bearish trend as sellers attempt to move below the support at 1.2000.

Bearish View

Set a sell-stop at 1.2000 and a take-profit at 1.1900.Add a stop-loss at 1.2200.Timeline: 1-2 days.

Bullish View

Set a buy-stop at 1.2135 and a take-profit at 1.2250.Add a stop-loss at 1.2000.

The GBP/USD price rose slightly ahead of the upcoming UK consumer and producer inflation data and the relatively weak US housing numbers. It rose to 1.2100, which was about 70 basis points above the lowest level this week.


UK Inflation and US Retail Sales Data

The GBP/USD price will be in the spotlight on Wednesday as investors reflect on key data from the United States and the UK.

The Office of National Statistics (ONS) will publish July’s inflation numbers. Economists surveyed by Reuters expect the data to show that inflation continued rising in July. Precisely, they expect that the headline CPI rose from 9.4% in June to 9.8% in July on a year-on-year basis. On a positive note, they believe that inflation dropped from 0.8% to 0.4%.

Excluding the volatile food and energy prices, analysts expect that the country’s inflation rose from 5.8% to 5.9%. On Tuesday, data compiled by Kantar showed that food prices in the country rose by 11.6% YoY in the four weeks to August 7. This was the biggest increase since the company started collecting the data in 2008.

The data will come a day after the UK published relatively weak jobs data as the unemployment rate rose from 3.7% to 3.8%. The employment rate dropped t 75.5% while the number of open vacancies dropped to 1.27 million.

The GBP/USD price will next react to the upcoming American retail sales numbers. With inflation soaring, analysts believe that sales dropped from 1.0% in June to 0.1% in July while core sales fell from 0.6% to -0.6%. On a positive note, top retailers like Walmart and Home Depot published strong results on Tuesday.

The pair will also react to the latest minutes of the FOMC. These minutes will provide more color about what the officials talked about in their meeting.

GBP/USD Forecast

The GBP/USD pair has been in a strong downward trend in the past few days. This decline started when the pair formed a double-top pattern at around 1.2288. In price action analysis, this pattern is usually a bearish sign. The pair rose in the overnight session after it hit the neckline of this pattern.

The GBP/USD pair remains below the 25-day and 50-day moving averages and the 38.2% Fibonacci Retracement level. Therefore, the pair will likely resume the bearish trend as sellers attempt to move below the support at 1.2000.

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