US:
- The Fed left interest rates unchanged as
expected. - The macroeconomic projections were revised higher
as the economy showed much stronger resilience than expected and the Dot Plot
showed that the majority of members still expects another rate hike by the end
of the year with less rate cuts in 2024. - Fed Chair Powell
reaffirmed their data dependency but added that they will proceed carefully as
they are trying to find the optimal level of rates. Powell also added that the
soft landing is not the base case at the moment, although they are aiming for
it. - The latest US CPI came
in line with expectations, so the market’s pricing remained roughly the same. - The labour market
displayed signs of softening although it remains fairly solid as seen also
yesterday with the strong beat in Jobless Claims. - The market doesn’t expect the Fed to hike again at
the moment.
UK:
- The BoE kept interest rates unchanged.
- The central bank is leaning more towards
keeping interest rates “higher for longer” but it kept a door open for further
tightening if inflationary pressures were to be more persistent. - Key economic data like the latest employment report showed a very high wage growth
despite the rising unemployment rate, but the latest UK CPI missed expectations across the board. - The UK PMIs last month missed expectations across the
board with the Services sector plunging into contraction. - The market doesn’t expect the BoE to
hike anymore.
GBPUSD Technical Analysis –
Daily Timeframe
GBPUSD Daily
On the daily chart, we can see that GBPUSD has
eventually breached the key 1.23 level, and this has opened the door for a fall
into the 1.18 handle. The price now looks overstretched although fundamentally
there’s nothing left to sustain the GBP. From a risk management perspective,
the sellers would have a better risk to reward setup if the price pulled back
all the way up to the downward trendline where we
can also find the red 21 moving average for confluence. Such a
big rally though is hard to envision at the moment.
GBPUSD Technical Analysis –
4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can see that the pair has
been respecting the minor downward trendline with the last selloff coming off
of the trendline following the more hawkish than expected FOMC dot plot. If we
get a pullback, the sellers are likely to lean on the minor trendline again
where we can also find the confluence with the red 21 moving average and the Fibonacci retracement levels.
The buyers, on the other hand, are likely to step in here with a defined risk
below the low to position for a rally and increase the bullish momentum if the
price breaks above the minor trendline.
GBPUSD Technical Analysis –
1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can see more
closely the bearish setup with the key support at
1.2308 now turned resistance and the trendline. The sellers are likely to
remain in control and pile in on every pullback. The buyers, on the other hand,
are likely to pile in at every breakout.
Upcoming Events
Today we have the UK
Retail Sales and the Flash PMIs for both the UK and the US.
