Fundamental Overview
The bullish momentum in the US Dollar seems to be waning as GBPUSD couldn’t print a new low despite another set of strong US data. In fact, the US Retail Sales beat expectations across the board by a big margin and the US Jobless Claims came out much better than expected.
One caveat is that the market has now priced out the aggressive rate cuts expectations and it’s almost perfectly in line with the Fed’s projections. Therefore, we will likely need stronger US data and especially signs of a pickup in inflation to see the market pricing in an earlier pause in the Fed’s easing cycle.
The next big risk events will be in November when we get the October data, the FOMC policy decision and the US election.
On the GBP side, we got the UK CPI report this week where the data missed expectations across the board and prompted the market to expect another 25 bps cut in December. This morning, we got strong UK Retail Sales figures which boosted the GBP.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD failed to break below the 1.30 handle and eventually bounced higher despite strong US data. The buyers are stepping in around these levels to position for a rally back into the 1.3265 level. The sellers will want to see the price breaking lower to extend the drop into the major trendline.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we got a nice spike upward this morning following the UK retail sales data but got rejected from the downward trendline. The buyers will need the price to break above the trendline to start targeting new highs, while the sellers will likely continue to lean on it to position for new lows.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is bouncing around a strong support zone around the 1.3035 level where we can find the confluence of the previous swing level and a minor upward trendline.
The buyers will likely pile in around these levels to target a break above the major downward trendline, while the sellers will look for a break lower to increase the bearish bets into the 1.29 handle. The red line define the average daily range for today.