Fundamental
Overview
The US Dollar rallied
across the board yesterday as Trump got elected President of the US. The
Republicans won also the Senate and the House giving us a red sweep and therefore
high chances of tax cuts.
This should be the most
bullish scenario for the greenback as it should lead to higher growth and less
rate cuts expectations.
In fact, given the red
sweep and the strong US data we keep on getting, the Fed might start to change
its stance, and we could see a much earlier than expected pause in 2025.
On the GBP side, we have
the BoE rate decision today where the central bank is expected to cut by 25 bps
with potentially 1 member voting for a hold and 2 members voting for a 50 bps
cut.
Looking ahead, the market
priced out the high chances of a back-to-back cut in December but if the data
were to worsen further, we might see the market pricing that back in.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD bounced from the recent low around the 1.2843 level. This is
where the buyers are stepping in to position for a pullback into the 1.30
handle. The sellers, on the other hand, will want to see the price breaking lower
to increase the bearish bets into the 1.27 handle next.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see more clearly the bounce from the recent low which is now a strong support
zone. There’s not much we can add here as we could get stuck in a range between
the 1.2843 support and the 1.3044 resistance. A breakout on either side should
lead to a more sustained trend.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see that we have a minor counter-trendline
defining the current pullback on this timeframe. The buyers will likely keep on
leaning on the trendline to position for new highs, while the sellers will look
for a break lower to position for the break of the support zone. The red lines
define the average daily range for today.
Upcoming
Catalysts
Today we have the BoE Policy Decision, the US Jobless Claims and the FOMC
Policy Decision. Tomorrow, we conclude the week with the University of Michigan
Consumer Sentiment report.