GBPUSD Technical Analysis – Playing the range

USD

• The Fed left interest rates unchanged as expected at the last meeting with a shift in
  the statement that indicated the end of the tightening cycle.
• The US GDP beat
  expectations by a big margin.
• The US PCE came mostly in line with expectations and
  the Core 3-month and 6-month annualised rates are now below the Fed’s 2%
  target.
• The labour market continues to soften but remains
  resilient with US Jobless Claims missing expectations last week but hovering around
  cycle lows.
• The latest US PMIs beat expectations by a big margin for
  both the Manufacturing and Services measures.
• The US Retail Sales beat expectations across the board.
• The University of Michigan Consumer Sentiment report jumped to the highest levels since
  2021.
• The Fed members recently have been pushing
  back on the aggressive rate cuts expectations.
• The market sees a 50/50 chance of a rate cut in
  March.

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  with no dovish language as they reaffirmed that they will keep rates high for
  sufficiently long to return to the 2% target.
• The latest employment report showed job losses in December and
  lower than expected wage growth.
• The UK CPI beat expectations across the board, which is
  going to reinforce the BoE’s neutral stance.
• The latest UK PMIs showed the Manufacturing sector improving but
  remaining in contraction while the Services sector continues to expand.
• The latest UK Retail Sales missed expectations across the
  board by a big margin as consumer spending remains weak.
• The market expects the BoE to start
  cutting rates in May.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD bounced
on the key support around
the 1.2610 level and rallied into the resistance around the 1.2800 handle
before consolidating again. There’s not much to glean from this timeframe as
the price trades right in the middle of the range, so we need to zoom in to see
some more details.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
broke through the upward trendline
yesterday but bounced back strongly following the lower than expected US
Treasury quarterly refunding estimate. The sellers though leant on the red 21 moving average and the
pair this morning fell again below the trendline. The target should be the
support zone around the 1.26 handle with a further breakout likely leading to a
drop into the 1.25 level.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that besides
the 4-hour 21 moving average, the sellers had also the previous swing high for confluence. If
the price were to reverse and rally again, the sellers will likely lean on the
downward trendline while the buyers will want to see the price breaking higher
to increase the bullish bets into the resistance zone.

Upcoming Events

This week is going to be a really busy one with the FOMC
rate decision and lots of economic data on the agenda. We begin today with the
US Job Openings and the US Consumer Confidence reports. Tomorrow we will see
the US Employment Cost Index and the ADP data before the FOMC rate decision
later in the day. On Thursday, we have the BoE rate decision and later in the
day the latest US Jobless Claims figures and the ISM Manufacturing PMI.
Finally, on Friday, we conclude the week with the US NFP report.