US:
- The Fed left interest rates unchanged as expected.
- The macroeconomic projections were revised higher as the economy showed much stronger resilience than expected and the Dot Plot showed that the majority of members still expects another rate hike by the end of the year with less rate cuts in 2024.
- Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully as they are trying to find the optimal level of rates. Powell also added that the soft landing is not the base case at the moment, although they are aiming for it.
- The latest US CPI came in line with expectations with the Core measure continuing to show disinflation.
- The labour market displayed signs of softening although it remains fairly solid as seen also yesterday with another beat in Jobless Claims.
- The US Consumer Confidence this week missed expectations although the jobs details were positive.
- The market doesn’t expect the Fed to hike again at the moment.
UK:
- The BoE kept interest rates unchanged.
- The central bank is leaning more towards keeping interest rates “higher for longer” but it kept a door open for further tightening if inflationary pressures were to be more persistent.
- Key economic data like the latest employment report showed a very high wage growth despite the rising unemployment rate, but the latest UK CPI missed expectations across the board.
- The latest UK PMIs showed further contraction, especially in the Services sector.
- The market doesn’t expect the BoE to hike anymore.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the GBPUSD pair has been melting with almost no pullback since the 1.27 area. The pair got really overstretched on the downside as depicted by the distance from the blue 8 moving average and this is generally when we can see some consolidation or a pullback into the moving average before the next move. The sellers are likely to pile in around the 1.23 resistance where we can also find confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. The buyers will need the price to break above the downward trendline to switch the overall trend.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another selling zone around the minor trendline and the 38.2% Fibonacci retracement level. We are likely to see GBPUSD falling again already from this spot if the bearish momentum remains strong. The buyers, on the other hand, will want to pile in at every upside breakout to target the major trendline.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor divergence with the MACD right when the price is approaching the selling zone. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we are likely to see the sellers piling in around the resistance with a defined risk above the trendline and increase the pressure if the price breaks also below the minor upward trendline. The buyers, on the other hand, should increase their longs if the price breaks above the trendline.
Upcoming Events
Today the only notable release will be the US PCE report. The data is unlikely to change anything for the market unless we get some big surprises.
