Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Bank of England is predicted to hike interest rates by 50 basis points to 4.00%. Forex traders can compare this to the previous Bank of England meeting, where the UK central bank raised interest rates by 50 basis points to 3.50%. Central bank watchers expect seven MPC members to vote for the hike, two to vote for no increase, and zero to vote for an interest rate cut, matching the last meeting’s voting composition. Expectations call for the global cost of living crisis to continue throughout 2023 as inflation remains high. China will add to inflationary pressures after it has reopened its economy. Initial data suggests faster-than-expected growth. Forex traders should watch for clues about the pace of interest rate increases, as the Bank of England may slow down to 25 basis point hikes moving forward.
US Initial Jobless Claims for the week of January 28th are predicted at 200K, and US Continuing Claims for the week of January 21st are predicted at 1,677K. Forex traders can compare this to US Initial Jobless Claims for the week of January 21st, reported at 186K, and US Continuing Claims for the week of January 14th at 1,675K.
Preliminary US Non-Farm Productivity for the fourth quarter is predicted to increase by 2.4% quarterly and Unit Labor Costs by 1.5% quarterly. Forex traders can compare this to US Non-Farm Productivity for the third quarter, which rose 0.8% quarterly, and Unit Labor Costs, which increased 2.4% quarterly.
US Factory Orders for December are predicted to increase by 2.3% monthly. Forex traders can compare this to US Factory Orders for November, which dropped by 1.8% monthly.
US Natural Gas Inventories for the week ending January 27th are predicted at -142B cubic feet. Traders can compare this to US Natural Gas Inventories for the week ending January 20th, reported at -91B cubic feet.
The forecast for the GBP/USD remains bullish as upside pressures increase at resistance, driven higher by the ascending Ichimoku Kinko Hyo Cloud, where the Senkou Span A and the Senkou Span B advance. The flat Kijun-sen and Tenkan-sen suggest short-term volatility could increase. Traders should also monitor the CCI following its breakdown from extreme overbought territory. This technical indicator has recovered and shows plenty of upside potential. Can bulls continue to push the GBP/USD into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the GBP/USD remain inside the or breakout above the 1.2355 to 1.2430 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.2385
- Take Profit Zone: 1.2600 – 1.2665
- Stop Loss Level: 1.2270
Should price action for the GBP/USD breakdown below 1.2355, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.2270
- Take Profit Zone: 1.2145 – 1.2200
- Stop Loss Level: 1.2355
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