USD

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 showed a slowdown in wage growth
  and some job losses in September which are pointing to a softening labour
  market.
• The recent UK CPI slightly beat expectations but given the
  softening in the labour market it’s unlikely to change the BoE’s stance.
• The UK PMIs showed further contraction in the services
  sector, which accounts for 80% of UK’s economic activity.
• The market doesn’t expect the BoE to
  hike anymore.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD managed
to break above the 1.23 handle at the start of the month but erased most of the
gains as the US Dollar got supported by rising Treasury yields. The price
recently bounced on the red 21 moving average as the
buyers continue to target a bigger correction into the 1.25 handle. The pair at
the moment is in a kind of a limbo, but the bias is skewed to the upside given
the series of higher highs and higher lows and the moving averages being
crossed to the upside.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair last
week bounced on the 1.22 handle where we had also the 61.8% Fibonacci retracement level
for confluence. The
break above the counter-trendline saw more
buyers piling in as the momentum favoured the upside. The sellers are likely to
lean on the 1.23 resistance again to
position for a bigger drop into the lows, so the buyers will need to break
above that level to increase the bullish bets.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
buyers are likely to lean on the upward trendline as they have also the
confluence with the 38.2% Fibonacci retracement level and the red 21 moving
average. The sellers, on the other hand, will want to see the price breaking
lower to invalidate the bullish setup and position for new lower lows. Watch
out for the UK jobs data at the top of the hour.

Upcoming Events

This week we have some top tier economic releases. Today,
at the top of the hour we will see the UK jobs data while later in the day, we
will also get the US CPI report which might be one of the most important events
of the week. Tomorrow, we have the UK CPI report and the US Retail Sales and
PPI data. On Thursday, the market will be focused on the latest US Jobless
Claims figures, while on Friday we conclude the week with the UK Retail Sales.

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