Over the past week, we’ve gotten many thoughts from different central bank speakers. The prevailing consensus is that waiting for additional data will help assess the extent of further tightening. While the majority of the FOMC expects two more rate hikes this year, it consistently stresses that this decision hinges on the data. Data from last week leaned towards rate hikes, in fact we saw very strong housing market data, stable US jobless claims, and US services PMI beat expectations.
Of course, the upcoming NFP and CPI reports will play a crucial role in shaping future decisions, but if we continue to get good data, the current market expectations of a rate hike by the Fed in July will likely materialize. On the contrary, the Bank of England surprised with a 50 basis point rate hike last week as an incredibly strong employment report and higher-than-expected core inflation figures sent the central bank moving towards more aggressive action.
GBPUSD technical analysis – daily time frame
GBPUSD daily
On the daily chart, we can see that GBPUSD has rebounded from the high of 1.2848 all the way to the previous high of 1.2680. We can see that the price has been rejected several times at this level which indicates that there are strong buyers swaying here and heading for more upside.
GBPUSD technical analysis – 4 hour time frame
GBPUSD 4 hours
On the 4 hours chart, we can see that GBPUSD has bottomed near the 1.2680 level and we are likely to see more upside from here. The moving averages are still crossing to the downside but once it turns to the upside we should see more buying pressure coming. On the other hand, sellers will want to wait for the price to break below the support area at 1.2650 to build up and target the support at 1.2444.
GBPUSD technical analysis – 1 hour time frame
GBPUSD 1 hour
On the hourly chart, we can see that the price is starting to consolidate in a narrow range recently between 1.2680 and 1.2750. A break above the top of the range should lead to a rally as momentum buyers will jump on board and target a new high. From a risk management perspective, sellers don’t have many options here other than waiting for a breakout below the support area.
This week is a bit exposed on the data front with US jobless claims only on Thursday and US PCE due on Friday. However, we will hear again from many central bank members.
