There is a likelihood that the pair will keep falling as bears target the next key support level at 1.2900.
Bearish View
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Sell the GBP/USD pair and set a take-profit at 1.2900.
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Add a stop-loss at 1.3230.
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Timeline: 1-2 days.
Bullish View
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Set a buy-stop at 1.3140 and a take-profit at 1.3250.
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Add a stop-loss at 1.3080.
The GBP/USD pair remained under pressure on Tuesday morning ahead of the latest UK jobs data. The upcoming Federal Reserve decision is also a major reason why the pair is hovering near its lowest point since November 2020.
UK Jobs Data Preview
The Office of National Statistics (ONS) will publish the latest UK jobs data in the morning session. Economists expect the data to show that the countrys labor market strengthened in January as the country moved from Covid restrictions.
Economists polled by Reuters expect the data to show that the UK unemployment rate dropped from 4.1% to 4.0% in January. If they are accurate, it will be the lowest it has been since the pandemic started in 2020. The rate was in this range even before the pandemic.
Additional numbers are expected to show that the average earnings plus bonus 4.6% in January from the previous 4.3%. Without bonuses, analysts believe that wages rose by 3.7%. The number of people filing for unemployment claims are also expected to have dropped.
While recent economic numbers from the UK have been positive, there are concerns about the impact of the crisis in Ukraine. For one, the country could experience low foreign direct investments from Russia as it intensifies its sanctions on the oligarchs.
Also, like in most countries, the UK will see rising costs across the board. Prices of most items like oil and natural gas has been in an upward trend.
The next key catalyst for the GBP/USD pair will be the upcoming interest rate decision by the Federal Reserve. Analysts believe that the bank will hike interest rates but are divided about the size of the hike. Some believe that it will deliver a 0.25% increase while others expect a 0.50% hike.
GBP/USD Forecast
The daily chart reveals that the GBP/USD pair has been in a strong bearish trend in the past few days. The sell-off accelerated when the price moved below the key support level at 1.3160, which was the lowest level this year.
The pair moved below the short and longer moving averages while the Stochastic Oscillator has fallen to the oversold level. Therefore, there is a likelihood that the pair will keep falling as bears target the next key support level at 1.2900.
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