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 PMIs missed expectations in April with the commentary citing lower inflationary pressures but also increased layoffs.
  • The US Retail Sales beat expectations across the board by a big margin with positive revisions to the prior figures.
  • The market 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 beating expectations and the Manufacturing PMI missing forecasts and slipping back into contraction.
  • The UK Retail Sales missed expectations across the board.
  • 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 pulled back into a cluster of resistance levels around the 1.25 handle where we can find the confluence of the 50% Fibonacci retracement level, the red 21 moving average and the trendline. This is where we can expect the sellers to step in with a defined risk above the trendline to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into the 1.28 handle.

GBPUSD Technical Analysis – 4 hour Timeframe

GBPUSD Technical Analysis
GBPUSD 4 hour

On the 4 hour chart, we can see that the price recently broke through the minor downward trendline and the resistance zone around the 1.24 handle and triggered a bullish move into the 1.25 handle as the buyers piled in more aggressively. What happens around the 1.25 resistance and the major trendline will be key as it will likely decide the direction for the next few weeks.

GBPUSD Technical Analysis – 1 hour Timeframe

GBPUSD Technical Analysis
GBPUSD 1 hour

On the 1 hour chart, we can see that the latest leg higher into the resistance is diverging with the MACD. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be a signal for a rejection and should give the sellers even more conviction for a move lower. If the price breaks below the black counter-trendline and the support zone around the 1.2460 level, it will be a confirmation for a reversal and will likely trigger a strong bearish move into new lows.

Upcoming Events

Today we get the US Q1 GDP and the latest US Jobless Claims figures. Tomorrow, we conclude the week with the US PCE report.