Fundamental Overview
The USD got a boost last week from the strong US PMIs which lifted Treasury yields and put in question the rate cut in September. Once the market digested the report and saw that there was more good news on the growth side than bad news on inflation, the USD strength faded fast.
The GBP, on the other hand, has been supported by a slightly more hawkish repricing in interest rates expectations following the hot UK CPI report last week.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD has been bouncing around the 1.27 handle recently with many economic data leading to an erratic price action. The bullish momentum seems to be intact and the next target for the buyers should be the 1.28 handle. The sellers will need the price to fall below the trendline to reverse the technical uptrend.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the trendline where they will also find the confluence of the previous swing high and the 38.2% Fibonacci retracement level.
At the moment, such a pullback looks unlikely, so we might first reach the 1.28 handle before seeing a bigger correction into the trendline as we have many important economic releases next week.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a notable resistance at the 1.2750 level where the price got rejected from several times. A break above it should see the buyers piling in with more conviction for a rally into the 1.28 handle. The sellers, on the other hand, might want to step in around these levels to position for a drop into the trendline around the 1.2640 level. The red lines show the average daily range of the pair.
Upcoming Catalysts
Tomorrow we get the US Consumer Confidence report where the focus will likely be on the labour market details. On Thursday, we will see the latest US Jobless Claims figures. Finally on Friday, we conclude the week with the US PCE report.
