USD
- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The recent US CPI missed expectations across the board bringing the expectations for rate cuts forward.
- The labour market is starting to show weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board, but yesterday the US Jobless Claims beat forecasts giving the USD a short-term boost.
- The latest US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
- The recent US Retail Sales beat expectations, while the US PPI missed forecasts by a big margin.
- The recent Fedspeak has been leaning on the hawkish side, but last week’s inflation report pretty much confirmed that the Fed might be done for the cycle.
- The market doesn’t expect the Fed to hike anymore.
GBP
- The BoE kept interest rates unchanged as expected at the last meeting.
- The central bank is leaning towards keeping interest rates “higher for longer”, although it keeps a door open for further tightening if inflationary pressures were to be more persistent.
- BoE Governor Bailey repeated that they will keep rates high for long enough to get inflation back to target.
- The latest employment report beat expectations with wage growth remaining at elevated levels.
- The UK CPI missed expectations across the board, which is a welcome development for the BoE.
- The UK PMIs showed further contraction in the services sector, which accounts for 80% of UK’s economic activity.
- The UK Retail Sales missed expectations across the board by a big margin as consumer spending remains weak.
- The market doesn’t expect the BoE to hike anymore.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD is approaching a key resistance level around the 1.26 handle where we can also find the 50% Fibonacci retracement level for confluence. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop into the upward trendline.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price action is forming what looks like a rising wedge right into the key resistance. Moreover, we can also notice 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 might be an extra confirmation that we could see a bigger correction to the downside into the major trendline around the 1.2350 level.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that there’s not much to lean onto except the trendlines and the key resistance. The sellers will look to short from the resistance and from the break below the bottom trendline. The buyers, on the other hand, should keep on leaning on the bottom trendline to target a break above the resistance, but in case the price breaks lower, the buyers will be waiting around the major trendline at 1.2350.
Upcoming Events
Today the US is on holiday for Thanksgiving Day and therefore the liquidity in the market will be thinner. Nonetheless we will get the latest UK PMIs which are going to be market moving, while tomorrow we conclude the week with the US PMIs.
