Fundamental Overview
Yesterday, we got two strong US data releases as the Jobless Claims and Retail Sales figures came out much better than expected. The initial reaction was US Dollar bullish, but after a while the market started to fade the move.
The reason is that the risk-on sentiment is generally negative for the greenback as the market focuses on positive global growth. Of course, the reasons to sell the USD are not that strong and that’s why in the big picture the major currency pairs have been mostly trading in a range for a year.
But in the short term, the changes in sentiment are influencing the price action and the US Dollar performance.
On the GBP side, this week we got good labour market data and a softer than expected UK CPI report. Overall, it didn’t change much the picture as the market continues to price in a 36% probability of a back-to-back cut in September.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD is breaking above the key resistance zone around the 1.29 handle. This is where we can expect the buyers to increase the bullish bets into the 1.3043 level next. The sellers, on the other hand, will want to see the price dropping back below the resistance to position for a drop into the 1.26 handle with a defined risk above the resistance.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that if we were to see a pullback, the buyers will likely lean on the upward trendline to position for new highs with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking below the trendline to increase the bearish bets into the 1.26 handle.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the breakout with momentum picking up steam as more buyers pile in. There’s not much else we can glean from this timeframe as the buyers will look to buy the breakout, while the sellers will want to see the price dropping back below the resistance to start positioning for a drop into the trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment survey.
