USD
- The Fed left interest rates unchanged as expected 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.
- Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
- The US CPI and the US PPI beat expectations for the second consecutive month.
- The US Jobless Claims beat expectations last week.
- The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase.
- The US Consumer Confidence missed expectations although the labour market details improved.
- The market now sees basically a 50/50 chance of a cut in June.
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 an uptick in the unemployment rate and an easing in wage growth.
- The UK CPI missed expectations across the board but 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 June.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD has been consolidating around the 1.26 handle as the market awaited some catalyst to push it in either direction. The strong US ISM Manufacturing PMI yesterday did exactly that and the pair broke down with the price extending the selloff into the 1.2540 level. The sellers will now be looking to sell the rallies and target the support around the 1.25 handle.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke out of the range between the 1.2580 support and the 1.2660 resistance. We now have a trendline that should define the current trend. If we get a pullback, the sellers should step in around the support turned resistance where they will also find the confluence of the trendline and the red 21 moving average. The buyers, on the other hand, will want to see the price breaking above the trendline to start targeting new highs.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the breakout and the current consolidation around the 1.2540 level. We can see that besides the resistance at the 1.2580 level, the sellers will also find the 38.2% Fibonacci retracement level for confluence. Alternatively, if the price extends higher, we will have the 61.8% Fibonacci retracement level around the trendline.
Upcoming Events
Today we have the US Job Openings and tomorrow the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures while on Friday we conclude with the US NFP report.
