US:

• The Fed left interest rates unchanged as
  expected at the last meeting.
• 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.
• The latest US Core PCE
  came
  in line with expectations with disinflation continuing steady.
• The labour market remains
  fairly solid as seen last week with another strong beat in Jobless Claims and the NFP report.
• The ISM Manufacturing PMI beat
  expectations while the ISM Services PMI came in
  line with forecasts in another sign that the US economy remains resilient.
• The market doesn’t expect the Fed to hike anymore.

UK:

• The BoE kept interest rates unchanged at the last meeting.
• 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 giving
  the BoE a bit of relief.
• The latest UK PMIs showed further contraction, especially in the
  Services sector.
• The majority of the BoE members are leaning towards keeping rates higher for longer now.
• The market doesn’t expect the BoE to
  hike anymore.

GBPUSD Technical Analysis –
Daily Timeframe

On the
daily chart, we can see that the GBPUSD pair eventually bounced near the 1.20
handle and it’s now approaching a key resistance zone. In
fact, we can see that around the 1.2310 level we have the confluence of the
red 21 moving average, the
38.2% Fibonacci retracement level
and the downward trendline. That’s
where the sellers are likely to pile in with a defined risk above the trendline
to position for another selloff into the 1.18 handle.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the last leg
lower diverged with the
MACD which is
usually a sign of weakening momentum often followed by pullbacks or reversals.
In this case, we are still in the pullback territory, but if the price breaks
above the downward trendline we will have a confirmation of a reversal and the
buyers will target new higher highs.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have some key zones where the price is likely to react to. From a risk
management perspective, the buyers would be better off waiting for the price to
come into the counter-trendline around the 1.2180 level where they will have a
much better risk to reward setup to target the 1.2310 resistance. In case the
price breaks below the counter-trendline, the sellers will likely jump onboard
and target the 1.1839 level.

Upcoming Events

This week the market is likely to focus on the CPI
report as that’s what might change the expectations around the next FOMC rate
decision. Today, we will see the US PPI data and later in the day the FOMC
Meeting Minutes. Tomorrow, it will be the time for the US CPI report, and at
the same time we will also get the latest Jobless Claims figures. On Friday we conclude
the week with the University of Michigan Consumer Sentiment report.

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