Fundamental Overview
The USD last week finished slightly positive but overall, it was a pretty flat week. We got some great US PMIs on Friday which showed growth without inflationary pressures. In fact, despite the strong PMIs the market pricing for interest rates remained unchanged. That should be positive for risk sentiment for the time being.
The GBP, on the other hand, got pressured mainly because of the BoE policy decision where the central bank dropped some dovish signals and kept the door open for a rate cut in August. Moreover, the disappointing UK PMIs on Friday led to some more weakness, although they were reversed after the US PMIs. The mood in the markets has been gradually improving and that should be positive for the Pound.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD eventually dropped all the way back to the 1.2635 support following the dovish BoE hints and the disappointing UK PMIs.
This is where we can expect the buyers to step in with a defined risk below the support to position for a rally into the 1.29 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.25 handle next.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have also the 38.2% Fibonacci retracement level of the entire rally since April standing around the 1.2635 level which technically strengthens the support level. The buyers will need to defend this level as a break below it could see the bearish momentum increasing.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have some rangebound price action around the support as it looks like the market is bottoming out here. A break above the latest lower high at 1.2675 should give the buyers some more conviction for a rally with the next target standing around the 1.2740 level. The red lines define the average daily range for today.
Upcoming Catalysts
This week is a bit light on the data front although we will still get to see some important releases. We begin tomorrow with the US Consumer Confidence where the market will be focused on the labour market details. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US PCE.