US:

• The Fed left interest rates unchanged as
  expected.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The latest US CPI came
  in line with expectations, so the market’s pricing remained roughly the same.
• The labour market displayed
  signs of softening although it remains fairly solid as seen also last week with
  the strong beat in Jobless Claims.
• The market doesn’t expect the Fed to hike again at
  the moment.

UK:

• The BoE kept interest rates unchanged.
• The central bank is leaning more towards
  keeping interest rates “higher for longer” but it kept a door open for further
  tightening if inflationary pressures were to be more persistent.
• Key economic data like the latest employment report showed a very high wage growth
  despite the rising unemployment rate, but the latest UK CPI missed expectations across the board.
• The latest UK PMIs showed further contraction, especially in the
  Services sector.
• The market doesn’t expect the BoE to
  hike anymore.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that since the 1.27
handle, the GBPUSD pair just kept on melting with very shallow pullbacks along
the way. The recent break of the swing level at 1.23 opened the door for a fall
into the 1.18 handle, which is the next strong support. The
price at the moment is a bit overstretched though as depicted by the distance
from the blue 8 moving average. In such
instances, we can generally see the price pulling back into the moving average
or consolidate a bit before the next impulse.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that if we were to
get a pullback, there’s a good resistance around the 1.23 handle where we have
the confluence with the
trendline, the
38.2% Fibonacci retracement level
and the daily blue 8 moving average. This is where we can expect the sellers to
pile in with a defined risk above the resistance to target the 1.18 handle. The
buyers, on the other hand, will want to see the price breaking above the
resistance to invalidate the bearish setup and position for a rally into the
major trendline around the 1.2450 level.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a divergence with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. From a risk management perspective, the sellers would have a much
better risk to reward trade if the price pulled back into the 1.23 handle. This
scenario is likely to happen only if the price breaks above the minor trendline
and the 1.2220 level. Otherwise, we might see bearish impulses from the minor
trendline onwards.

Upcoming Events

Today we will see the latest US Consumer Confidence
report which surprised to the downside the last time and weighed on the USD in
the short term as Treasury yields fell. On Thursday, we will have another US
Jobless Claims data which keeps on showing strength in the labour market
maintaining the hawkish pricing in interest rates expectations. Finally, on
Friday, we will get the latest US PCE data.

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