USD

  • The Fed left interest rates unchanged as expected with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
  • Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
  • The US CPI and the US PPI beat expectations for the second consecutive month.
  • The US Jobless Claims beat expectations last week.
  • The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
  • The US Consumer Confidence missed expectations although the labour market details improved.
  • The market still expects the first cut in June but the probability stands at just 60%.

GBP

  • The BoE left interest rates unchanged as expected but with Haskel and Mann this time voting for a hold instead of a hike.
  • The employment report missed expectations with an uptick in the unemployment rate and an easing in wage growth.
  • The UK CPI missed expectations across the board but with Services inflation remaining sticky, which continues to support the BoE’s patient stance.
  • The latest UK PMIs showed the Services PMI missing expectations slightly and the Manufacturing PMI beating.
  • The market expects the first rate cut in June.

GBPUSD Technical Analysis – Daily Timeframe

GBPUSD Technical Analysis
GBPUSD Daily

On the daily chart, we can see that GBPUSD yesterday jumped following the US ISM Services PMI release as the price index dropped to the lowest level in 4 years quelling some inflation fears caused by the strong US ISM Manufacturing PMI on Monday. The price is now near the recent swing high level where we can expect the sellers to step in to position for new lows, while the buyers will look for a break higher to target the 1.28 handle.

GBPUSD Technical Analysis – 4 hour Timeframe

GBPUSD Technical Analysis
GBPUSD 4 hour

On the 4 hour chart, we can see that reacted to the key resistance zone around the 1.2670 level where we can find the confluence of the previous swing high, the 50% Fibonacci retracement level and the trendline. This is where we can expect the sellers to step in with a defined risk above the trendline to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into the 1.28 handle.

GBPUSD Technical Analysis – 1 hour Timeframe

GBPUSD Technical Analysis
GBPUSD 1 hour

On the 1 hour chart, we can see more closely the recent price action with the strong push higher yesterday following the ISM Services PMI release and the rejection from the resistance today. If the price breaks below the most recent higher low at 1.2643, we could see the sellers increasing the bearish bets. Nonetheless, a lot will depend on the US NFP tomorrow and the US CPI next Wednesday. Those two data points will likely decide the direction for the next weeks.

Upcoming Events

Today we get the latest US Jobless Claims figures while tomorrow we conclude the week with the US NFP report.