Throughout the previous week, we got many insights from various central bank speakers. The prevailing consensus is that awaiting additional data will help to assess the extent of further tightening. While the majority of the FOMC expects two more rate hikes this year, they consistently stress that this decision hinges on the data. The data from last week leans towards a rate hike, in fact we saw very strong housing market data, stable US Jobless Claims, and the US Services PMI beating expectations.
Naturally, the upcoming NFP and CPI reports will play a crucial role in shaping future decisions, but if we keep getting good data, it is likely that the market's current anticipation of a rate increase by the Fed in July will materialize. Conversely, the BoE surprised with a 50 bps rate hike last week as the incredibly strong employment report and a higher than expected core inflation figure made the central bank to lean for a more aggressive action.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD has retraced from the 1.2848 high all the way back to the previous 1.2680 high. We can see that the price has been rejected many times at this level possibly indicating that there are strong buyers leaning here and positioning for more upside.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that GBPUSD has been finding a bottom near the 1.2680 level and we are likely to see more upside from here. The moving averages are still crossed to the downside but as soon as they cross back to the upside, we should see even more buying pressure coming in. The sellers, on the other hand, will want to wait for the price to break below the support zone at 1.2650 to pile in and target the 1.2444 support.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price started to consolidate in a tight range recently between 1.2680 and 1.2750. A break above the top of the range should lead to a rally as momentum buyers would jump onboard and target a new high. From a risk management perspective, the sellers don’t have many options here other than waiting for the break below the support zone.
This week is a bit bare on the data front with just the US Jobless Claims on Thursday and the US PCE scheduled for Friday. Nonetheless, we will hear again from many central bank members.
