USD

• The Fed left interest rates unchanged as
  expected while dropping the tightening bias in the statement but adding a
  slight pushback against a March rate
  cut.
• Fed Chair Powell stressed
  that they want to see more evidence of inflation falling back to target and
  that a rate cut in March is not their base case.
• The latest US GDP beat
  expectations by a big margin.
• The US PCE came
  mostly in line with expectations with the Core 3-month and 6-month annualised
  rates falling below the Fed’s 2% target.
• The US NFP report
  beat expectations across the board by a big margin.
• The ISM Manufacturing
  PMI
  surprised to the upside with the new orders index, which is considered a
  leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat
  expectations across the board with the employment sub-index erasing the prior
  drop and prices paid jumping above 60.
• The US Consumer
  Confidence report came in line with expectations but
  the labour market details improved considerably.
• The market now expects the first rate cut in May.

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  removing the tightening bias but reaffirming that they will keep rates high for
  sufficiently long to return to the 2% target.
• The latest employment report showed job losses in December and
  lower than expected wage growth.
• The UK CPI beat expectations across the board, which gives
  the BoE a reason to remain patient.
• The latest UK PMIs showed the Manufacturing sector improving but
  remaining in contraction while the Services sector continues to expand.
• The latest UK Retail Sales missed expectations across the
  board by a big margin as consumer spending remains weak.
• The market expects the BoE to start
  cutting rates in May.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD finally
broke out of the range and quickly fell to the next support zone
around the 1.25 handle where we can also find the 38.2% Fibonacci retracement level
for confluence. This is
where the buyers stepped in with a defined risk below the level to position for
a rally into new highs. The sellers, on the other hand, will want to see the
price breaking this support as well to start targeting the 1.22 handle.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the sellers will have a much better risk to reward
setup around the previous support now turned resistance where we
can also find the confluence with the 38.2% Fibonacci retracement level and the
red 21 moving average. The
buyers, on the other hand, will want to see the price breaking above the
resistance to invalidate the bearish setup and increase the bullish bets into
the next resistance.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor upward trendline
defining the current short term trend to the upside. If the price were to break
below the trendline, we can expect the sellers to pile in already to position
for a break below the 1.25 handle and new lower lows. The buyers, on the other
hand, should keep on leaning on the trendline to continue targeting the 1.26
resistance.

Upcoming Events

This week is basically empty on the data front with just
the latest US Jobless Claims figures on Thursday being the only notable release.

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