Fundamental Overview
The US Dollar rallied across the board yesterday as Trump got elected President of the US. The Republicans won also the Senate and the House giving us a red sweep and therefore high chances of tax cuts.
This should be the most bullish scenario for the greenback as it should lead to higher growth and less rate cuts expectations.
In fact, given the red sweep and the strong US data we keep on getting, the Fed might start to change its stance, and we could see a much earlier than expected pause in 2025.
On the GBP side, we have the BoE rate decision today where the central bank is expected to cut by 25 bps with potentially 1 member voting for a hold and 2 members voting for a 50 bps cut.
Looking ahead, the market priced out the high chances of a back-to-back cut in December but if the data were to worsen further, we might see the market pricing that back in.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD bounced from the recent low around the 1.2843 level. This is where the buyers are stepping in to position for a pullback into the 1.30 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.27 handle next.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the bounce from the recent low which is now a strong support zone. There’s not much we can add here as we could get stuck in a range between the 1.2843 support and the 1.3044 resistance. A breakout on either side should lead to a more sustained trend.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor counter-trendline defining the current pullback on this timeframe. The buyers will likely keep on leaning on the trendline to position for new highs, while the sellers will look for a break lower to position for the break of the support zone. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the BoE Policy Decision, the US Jobless Claims and the FOMC Policy Decision. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment report.