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 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 the broken support turned resistance around the 1.25 handle and extended the selloff into the 1.23 handle where we got a small bounce. We can notice that the price is again a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.

GBPUSD Technical Analysis – 4 hour Timeframe

GBPUSD Technical Analysis
GBPUSD 4 hour

On the 4 hour chart, we can see that the price is diverging with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it could be a signal for a pullback into the minor black trendline where we can also find the confluence of the Fibonacci retracement levels and the red 21 moving average. 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 position for a rally into the major trendline around the 1.25 handle.

GBPUSD Technical Analysis – 1 hour Timeframe

GBPUSD Technical Analysis
GBPUSD 1 hour

On the 1 hour chart, we can see more closely the bearish setup around the 1.24 handle. Watch out for the UK and the US PMIs today as they will be market moving events and will likely trigger the outlined setups.

Upcoming Events

Today we get the UK and the US Flash PMIs. On Thursday we will see the latest US Jobless Claims figures, while on Friday we conclude the week with the US PCE report.