Fundamental
Overview
The bullish momentum in the
US Dollar seems to be waning as GBPUSD couldn’t print a new low despite another
set of strong US data. In fact, the US
Retail Sales beat expectations across the board by a big margin and the US
Jobless Claims came out much better than expected.
One caveat is that the
market has now priced out the aggressive rate cuts expectations and it’s almost
perfectly in line with the Fed’s projections. Therefore, we will likely need stronger
US data and especially signs of a pickup in inflation to see the market pricing
in an earlier pause in the Fed’s easing cycle.
The next big risk events
will be in November when we get the October data, the FOMC policy decision and
the US election.
On the GBP side, we got the
UK CPI report this week where the data missed
expectations across the board and prompted the market to expect another 25 bps
cut in December. This morning, we got strong UK
Retail Sales figures which boosted the GBP.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD failed to break below the 1.30 handle and eventually bounced
higher despite strong US data. The buyers are stepping in around these levels
to position for a rally back into the 1.3265 level. The sellers will want to see
the price breaking lower to extend the drop into the major trendline.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see that we got a nice spike upward this morning following the UK retail sales
data but got rejected from the downward trendline. The buyers will need the price
to break above the trendline to start targeting new highs, while the sellers
will likely continue to lean on it to position for new lows.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see that the price is bouncing around a strong support zone around the 1.3035
level where we can find the confluence of the previous swing level and a minor
upward trendline.
The buyers will likely pile
in around these levels to target a break above the major downward trendline,
while the sellers will look for a break lower to increase the bearish bets into
the 1.29 handle. The red line define the average daily range for today.