Since the last FOMC meeting the US economic data surprised consistently to the upside leading to a more hawkish pricing for interest rates expectations. In fact, Fed Chair Powell said that the majority of the FOMC expects two or more rate hikes coming if the economy performs as expected.
Conversely, the UK employment and inflation reports keep on being too hot and the BoE is expected to keep hiking with a terminal rate now standing somewhere above the 6% level. BoE’s Governor Bailey has repeated that they are committed in bringing inflation back to target and will do what is necessary remaining data dependent.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the price has recently bounced on the red 21 moving average and avoided a bearish crossover. The bullish trend remains intact for now, but a lot will depend on the next NFP and CPI reports as the market is basically ranging waiting for the data releases.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has rallied strongly back above the 1.2680 level and pulled back into the red 21 moving average and the 50% Fibonacci retracement level before bouncing back again. We’re now seeing some consolidation here as liquidity today is thinner due to the US being on holiday and the market awaiting the data.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we might have a bullish flag pattern forming here. If the price breaks above the black trendline, we should expect the buyers piling in and extend the rally to the 1.2847 high. On the other hand, if the price breaks below the support zone and the 50% Fibonacci level, we can expect the sellers extend the fall into the major blue trendline targeting eventually a break lower.
Upcoming Events
Today it’s Independence Day in the US, so liquidity will be thinner, but we’ll have some major events in the following days such as the US Jobless Claims and ISM Services PMI on Thursday and the main event of the week: the US NFP on Friday.