Fundamental Overview
The USD got a boost yesterday from another set of hot data as the US Job Openings surprised to the upside and the prices paid index in the ISM Services PMI jumped to the highest level since 2023.
The market’s pricing didn’t change much but traders no longer fully price in the next rate cut before July. The US CPI report next week remains a key catalyst that will influence greatly the market’s pricing.
On the GBP side, the BoE kept the Bank Rate unchanged as expected at the last policy decision but we got a more dovish than expected vote split as 3 voters wanted a rate cut compared to just 1 expected.
The market is pricing a 65% chance of a rate cut at the upcoming meeting in February and a total of 53 bps of easing by the end of the year.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD erased the entire Christmas period drop but started its move lower again yesterday as the US data surprised to the upside. The sellers piled in with more conviction on the break below the 1.2485 support and will likely target the 1.23 handle. The buyers, on the other hand, will likely step in around the 1.23 handle to position for new highs with a better risk to reward setup.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, there’s not much else we can add here as the sellers will keep on pushing towards the 1.23 handle, while the buyers will look for a bounce there for a move back into the highs.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor downward trendline defining the current bearish momentum on this timeframe. The sellers will likely keep on leaning on it to position for further downside, while the buyers will look for a break higher to increase the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we have Fed’s Waller speaking, the US ADP and the FOMC Minutes. Tomorrow, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP report.