USD
- The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
- The US Q1 GDP surprisingly missed expectations although the core components showed a strong economy, nonetheless.
- The US PCE came in line with expectations.
- The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
- The US PMIs missed expectations in April with the commentary citing lower inflationary pressures but also increased layoffs.
- The market expects the first rate cut in September.
GBP
- The BoE left interest rates unchanged as expected but with Haskel and Mann this time voting for a hold instead of a hike.
- The employment report missed expectations with a big jump in the unemployment rate although the wage growth increased.
- The UK CPI beat expectations with Services inflation remaining sticky, which continues to support the BoE’s patient stance.
- The latest UK PMIs showed the Services PMI beating expectations and the Manufacturing PMI missing forecasts and slipping back into contraction.
- The UK Retail Sales missed expectations across the board.
- The market expects the first rate cut in August.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD managed to erase most of the losses from the US CPI release and it’s now breaking out of the red 21 moving average and the trendline. The buyers are starting to pile in to position for a rally into the 1.28 handle although they will need to keep an eye on the lower timeframes to check if the bullish trend remains intact. The sellers, on the other hand, should wait for the price to fall back below the trendline to leave behind a fakeout and position for a drop into new lows.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have some strong support around the 1.2515 level where we can find the confluence of the upward trendline, the red 21 moving average and the 50% Fibonacci retracement level. If we get a pullback into that zone, the buyers will likely step in with a defined risk below the trendline to position for new highs. The sellers, on the other hand, will want to see the price breaking lower to confirm the fakeout from the major downward trendline and position for a drop into new lows.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price on this timeframe has been diverging with the MACD for quite some time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be a signal for at least a pullback into the upward trendline. A breakout to the downside though will confirm the reversal and increase the bearish momentum. The data this week will give us the direction and the technicals will help in structuring trades.
Upcoming Events
Today, we have the US Q1 Employment Cost Index and the Consumer Confidence report. Tomorrow, we get the US ADP, the ISM Manufacturing PMI, the Job Openings and the FOMC rate decision. On Thursday, we will see the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP and ISM Services PMI.
