US
- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The US Core PCE last week came in line with expectations.
- The labour market remains pretty resilient but we are starting to see some weakness as Continuing Claims missed expectations once again last week pointing to an upward trend.
- The US Employment Cost Index showed that wage growth picked up in Q3.
- The US Consumer Confidence fell for the third consecutive month although the data beat expectations.
- The US ISM Manufacturing PMI yesterday missed by a big margin.
- The market doesn’t expect the Fed to hike anymore.
UK
- The BoE kept interest rates unchanged as expected today.
- The central bank is leaning towards keeping interest rates “higher for longer”, although it keeps a door open for further tightening if inflationary pressures were to be more persistent.
- BoE Governor Bailey repeated that they will keep rates high for long enough to get inflation back to target.
- The latest employment report showed a slowdown in wage growth and some job losses in September which could point to a softening labour market.
- The recent UK CPI slightly beat expectations but given the softening in the labour market it’s unlikely to change the BoE’s stance.
- The UK PMIs showed further contraction in the services sector, which accounts for 80% of UK’s economic activity.
- The market doesn’t expect the BoE to hike anymore.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the GBPUSD pair is currently breaking out of the trendline. The buyers are likely to pile in with a defined risk below the most recent low and target the 1.23 resistance. The sellers, on the other hand, are likely to wait around the 1.23 handle to step in with a defined risk above it and position for a drop into the 1.1840 level.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the breakout of the trendline following the BoE rate decision and especially the weaker US economic data. The price has been printing higher highs and higher lows, so the current market structure on this timeframe is bullish. The sellers might still try to fade the move buying the USD as a safe haven, but the odds are more in favour of the buyers at the moment.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that if we were to get a pullback, the buyers should lean on the minor upward trendline where they will also find the red 21 moving average and the 50% Fibonacci retracement level for confluence. The sellers, on the other hand, will want to see the price breaking lower and falling back below the major downward trendline to invalidate the bullish setup and position for a drop into new lows.
Upcoming Events
Tomorrow, we conclude the week with the US NFP report and the ISM Services PMI.
