GBPUSD Technical Analysis - The bearish bias is still intact

The GBPUSD pair maintains a bearish bias as the price continues to be rejected from the downward trendline.

FL Contributors

Tuesday, 31/10/2023 | 07:08 GMT

GBPUSD Fundamental Analysis

The Fed left interest rates unchanged as expected at the last meeting.
The macroeconomic projections were revised higher, and the Dot Plot showed that the FOMC still expects another rate hike by the end of the year with less rate cuts projected in 2024.
Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully.
The US Core PCE last week came in line with expectations, so the market’s pricing barely changed.
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 Retail Sales recently beat expectations by a big margin with positive revisions to the prior figures, suggesting the consumers’ spending remains solid.
The recent US PMIs showed that the economy now looks more balanced.
Fed Chair Powelland other FOMC members continue to highlight the rise in long term yields as doing the job for the Fed and therefore they are expected to keep rates steady this week.
The market doesn’t expect the Fed to hike anymore.

The BoE kept interest rates unchanged at the last meeting.
The central bank is leaning towards keeping interest rates “higher for longer”, although it kept a door open for further tightening if inflationary pressures were to be more persistent.
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 continues to hover around the downward trendline maintaining a bearish bias with the 1.1840 level as the target. The sellers are likely to keep leaning on the trendline to position for further downside. The buyers, on the other hand, will need the price to break above the trendline to change the bias from bearish to bullish and start targeting new highs.

GBPUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the pair is forming what looks like a descending triangle. The price action inside the pattern is generally messy and erratic, and it’s usually better to wait for a breakout or leaning on the boundaries of the triangle instead of taking trades within it.

GBPUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that from a risk management perspective, the sellers would be better off selling from the trendline with a defined risk above it and target a break below the 1.2050 support. If the price breaks to the upside, the sellers can fold quickly as the buyers will start to pile in more aggressively and target the 1.23 resistance. Conversely, the buyers would be better off waiting for the price to fall into the 1.2050 support before positioning for a rally into the highs and target a breakout of the triangle.

Upcoming Events

This week, we will get lots of tier one data points with the US labour market and the FOMC decision in focus. Today, we have the US Employment Cost Index and the Consumer Confidence report. Tomorrow, it will be the time for the US ADP, the ISM Manufacturing PMI, the Job Openings data and the FOMC rate decision. On Thursday we will have the BoE rate decision and the US Jobless Claims data, while on Friday we conclude the week with the US NFP report and the ISM Services PMI.