Fundamental
Overview

The USD continues to remain
under pressure against most major currencies despite higher Core PCE estimates
following the US CPI and PPI reports, and a better-than-expected Retail Sales data on Monday.

The market pricing for the
Fed went from expecting more than 80 bps of easing by year-end at the peak of
the risk-off sentiment to roughly 59 bps as of now. That didn’t provide a
pullback in the US Dollar selloff though. The focus now switched to the FOMC
decision due later today where the Fed is expected to keep rates steady.

On the GBP side, the recent
news on European defence spending boosted the pound as well given that the EU
is UK’s largest trading partner. On the domestic front, the data continues to
put the BoE in an uncomfortable position given the high wage growth and sticky
inflation. The BoE is expected to keep rates unchanged tomorrow with a 7-2 vote
split. The market expects just two rate cuts by the end of the year.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD is trading at the 1.30 handle. From a risk management
perspective, the buyers will have a better risk to reward setup around the support zone around the 1.28 handle where they will
also have the upward trendline for confluence. The sellers, on the other hand,
will look for a break below the support to increase the bearish bets into the major
trendline around the 1.26 handle.

GBPUSD Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that the pair is trading inside a rising channel. The buyers will likely
lean on the bottom trendline to position for further upside, while the sellers
will look for a break lower to pile in for a pullback into the support zone
around the 1.28 handle.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much we can add here as the buyers will look for a bounce around the bottom
trendline, while the sellers will look for a break lower. The red lines define
the average daily range for today although they will likely
be unreliable today due to the FOMC event.

Upcoming Catalysts

Today we have the FOMC Policy Decision.
Tomorrow, we have the BoE Policy Decision and the US Jobless Claims data.