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 Core PCE
came
in line with expectations with disinflation continuing steady. - The labour market
displayed signs of softening although it remains fairly solid as seen also last
week with a strong beat in Jobless Claims. - The ISM Manufacturing PMI beat
expectations yesterday in another sign that the US economy remains resilient. - 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 latest UK PMIs showed further contraction, especially in the
Services sector. - 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 the GBPUSD pair
continues to melt but the selling is becoming overstretched. From a risk
management perspective, the sellers would be better off waiting for the price
to pull back into the 1.23 resistance where we
can find the confluence with the
red 21 moving average and the
38.2% Fibonacci retracement level.
The buyers, on the other hand, will need the price to break above the trendline to turn
the trend around.
GBPUSD Technical Analysis –
4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can see that the latest leg
lower is diverging with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might see a pullback into the downward trendline
where the sellers are likely to step in, but an even better level to short from
will be the resistance zone around the 1.23 level.
GBPUSD Technical Analysis –
1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can see that we
have a minor resistance zone around the 1.21 level where we can find also the
38.2% Fibonacci retracement level for confluence. That’s where we can expect
the sellers to step in again in case of a pullback. The buyers, on the other
hand, will want to see the price breaking higher to position for a rally into
the trendline around the 1.22 handle and target the 1.23 resistance zone.
Upcoming Events
This week we have many key economic releases that will
culminate in the US NFP report on Friday. Today, we will have the US Job
Openings data which led to a strong rally the last time as the big miss made
Treasury yields to fall due to less labour market tightness and less hawkish
Fed expectations. Tomorrow, it will be the time for the ADP report and the ISM
Services PMI. On Thursday, we will see the Jobless Claims data, which continues
to show a solid labour market. Finally on Friday, it will be the time for the
NFP report which is the only one the Fed will see before its next rate
decision.
