Fundamental Overview
The USD continues to remain under pressure against most major currencies despite higher Core PCE estimates following the US CPI and PPI reports, and a better-than-expected Retail Sales data on Monday.
The market pricing for the Fed went from expecting more than 80 bps of easing by year-end at the peak of the risk-off sentiment to roughly 59 bps as of now. That didn’t provide a pullback in the US Dollar selloff though. The focus now switched to the FOMC decision due later today where the Fed is expected to keep rates steady.
On the GBP side, the recent news on European defence spending boosted the pound as well given that the EU is UK’s largest trading partner. On the domestic front, the data continues to put the BoE in an uncomfortable position given the high wage growth and sticky inflation. The BoE is expected to keep rates unchanged tomorrow with a 7-2 vote split. The market expects just two rate cuts by the end of the year.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD is trading at the 1.30 handle. From a risk management perspective, the buyers will have a better risk to reward setup around the support zone around the 1.28 handle where they will also have the upward trendline for confluence. The sellers, on the other hand, will look for a break below the support to increase the bearish bets into the major trendline around the 1.26 handle.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair is trading inside a rising channel. The buyers will likely lean on the bottom trendline to position for further upside, while the sellers will look for a break lower to pile in for a pullback into the support zone around the 1.28 handle.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much we can add here as the buyers will look for a bounce around the bottom trendline, while the sellers will look for a break lower. The red lines define the average daily range for today although they will likely be unreliable today due to the FOMC event.
Upcoming Catalysts
Today we have the FOMC Policy Decision. Tomorrow, we have the BoE Policy Decision and the US Jobless Claims data.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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