GBPUSD Technical Analysis – The break of the range is a bearish signal

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• The US economic data keeps on surprising to the
  upside, but inflation expectations and CPI readings continue to show
  disinflation with the last two Core CPI M/M figures
  coming in at 0.16%.
• The US
  PMIs missed expectations across the board and brought down Treasury yields weakening
  the US Dollar, but the US
  Jobless Claims came out better than expected once again and supported the
  USD.
• At the moment, the market doesn’t expect another
  hike from the Fed, but the next NFP and CPI data will be crucial to confirm or
  change this view.

UK:

• The BoE hiked by 25 bps as expected.
• The central bank seems to be leaning
  more on the less hawkish side as a key line in the statement was tweaked to
  indicate the propensity for a “higher for longer” stance rather than keeping
  with additional rate hikes.
• Recent key economic data like the
  latest employment report showed even more wage growth
  despite the unemployment rate ticking higher again, and the UK CPI beat expectations pointing to stagflation.
• The UK PMIs missed expectations across the board with the
  Services sector plunging into contraction.
• The 25 bps hike in September now
  looks much less certain.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD
eventually broke through the key support zone
around the 1.2593 level as the sellers leant on the red 21 moving average and
increased the selling pressure as the UK PMIs missed expectations by a big
margin. This breakout opened the door for much lower prices with the first
target coming at 1.2310.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we had a range
between the 1.2593 support and 1.2800 resistance. As expected, the sellers
piled in around the resistance with a defined risk above the level and
positioned for a break below the support. Now, we should see more sellers coming
into the market at every pullback and the first one may happen on a retest of
the broken support now turned resistance.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have some good confluence around
the broken support where the sellers can step in. In fact, we can find the
previous swing low level, the red 21 moving average and the 38.2% Fibonacci
retracement level. The buyers will need the price to
break above this strong zone to invalidate the bearish setup and position for
another rally into the resistance.

Upcoming Events

Today the only major
event is Fed Chair Powell’s speech at the Jackson Hole Symposium. The
expectations though are for him to take a “wait and see” approach as we have
more key economic data ahead before the next FOMC meeting.