USD

  • The Fed left interest rates unchanged as expected at the last meeting with a shift in the statement that indicated the end of the tightening cycle.
  • The US GDP beat expectations by a big margin.
  • The latest US CPI slightly beat expectations but analysts expect the Core PCE to print at 0.2% M/M again following the CPI data.
  • The labour market continues to soften but remains resilient with US Jobless Claims missing expectations this week but hovering around cycle lows.
  • The latest US PMIs beat expectations by a big margin for both the Manufacturing and Services measures.
  • The US Retail Sales beat expectations across the board.
  • The University of Michigan Consumer Sentiment report jumped to the highest levels since 2021.
  • The Fed members recently have been pushing back on the aggressive rate cuts expectations.
  • The market sees 50/50 chance of a rate cut in March.

GBP

  • The BoE left interest rates unchanged as expected at the last meeting with no dovish language as they reaffirmed that they will keep rates high for sufficiently long to return to the 2% target.
  • The latest employment report showed job losses in December and lower than expected wage growth.
  • The UK CPI beat expectations across the board, which is going to reinforce the BoE’s neutral stance.
  • The latest UK PMIs showed the Manufacturing sector improving but remaining in contraction while the Services sector continues to expand.
  • The latest UK Retail Sales missed expectations across the board by a big margin as consumer spending remains weak.
  • The market expects the BoE to start cutting rates in Q2.

GBPUSD Technical Analysis – Daily Timeframe

GBPUSD Technical Analysis
GBPUSD Daily

On the daily chart, we can see that GBPUSD bounced on the key support around the 1.2610 level and rallied into the resistance around the 1.2800 handle. There’s not much to glean from this timeframe as the price trades right in the middle of the range, so we need to zoom in to see some more details.

GBPUSD Technical Analysis – 4 hour Timeframe

GBPUSD Technical Analysis
GBPUSD 4 hour

On the 4 hour chart, we can see that the pair has been rising tentatively as both the currencies remain relatively strong. We can see that the price is approaching a trendline where we will likely see the buyers stepping in with a defined risk below it to position for a rally into the resistance. The sellers, on the other hand, will want to see the price breaking lower to pile in and target a drop into the support.

GBPUSD Technical Analysis – 1 hour Timeframe

GBPUSD Technical Analysis
GBPUSD 1 hour

On the 1 hour chart, we can see that we have a downtrend as the price has been making lower lows and lower highs. The sellers stepped in around the trendline where they had the confluence with the Fibonacci retracement levels and the red 21 moving average to target a breakout below the major upward trendline. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into the resistance.

Upcoming Events

Today the only notable release will be the US PCE report.