USD

  • The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
  • The US CPI beat expectations for the third consecutive month, while the US PPI came in line with forecasts.
  • The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
  • The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
  • The US Retail Sales beat expectations across the board by a big margin with positive revisions to the prior figures.
  • The market now expects the first rate cut in September.

GBP

  • The BoE left interest rates unchanged as expected but with Haskel and Mann this time voting for a hold instead of a hike.
  • The employment report missed expectations with a big jump in the unemployment rate although the wage growth increased.
  • The UK CPI beat expectations with Services inflation remaining sticky, which continues to support the BoE’s patient stance.
  • The latest UK PMIs showed the Services PMI missing expectations slightly and the Manufacturing PMI beating.
  • The market expects the first rate cut in August.

GBPUSD Technical Analysis – Daily Timeframe

GBPUSD Technical Analysis
GBPUSD Daily

On the daily chart, we can see that GBPUSD is pulling back into some key resistance levels with even a possible break and retest pattern around the 1.25 handle. In fact, we can see that the sellers will have two short opportunities:

  • The first one around the 1.25 handle where they will also find the confluence of the 38.2% Fibonacci retracement level and the blue 8 moving average.
  • The second one around the 1.26 handle where they will find the confluence of the trendline, the 61.8% Fibonacci retracement level and the red 21 moving average.

The buyers, on the other hand, will need to break above the trendline to turn the trend around and start targeting a new cycle high.

GBPUSD Technical Analysis – 4 hour Timeframe

GBPUSD Technical Analysis
GBPUSD 4 hour

On the 4 hour chart, we can see more clearly the bearish setups around the 1.25 and the 1.26 handles. If the price were to break above the 1.25 resistance zone, we can expect the buyers to increase the bullish bets into the trendline targeting a break above it. There’s not much else to glean from this chart, so we need to zoom in to see some more details.

GBPUSD Technical Analysis – 1 hour Timeframe

GBPUSD Technical Analysis
GBPUSD 1 hour

On the 1 hour chart, we can see that the price has been diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the ultimate target for the pullback should be the base of the divergent formation around the 1.26 handle with a break above it confirming a reversal. In case, we get a rejection from the 1.25 resistance, the buyers might lean on the black counter-trendline to position for a rally into the major trendline. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows.

Upcoming Events

Today we get the latest US Jobless Claims figures, while tomorrow we conclude the week with the UK Retail Sales.