Fundamental
Overview
The USD finally got a bit
of a boost after the FOMC decision despite the central bank maintaining the
status quo. In fact, the Fed kept rates steady, reduced the QT pace, revised
growth lower and inflation higher, and kept the dot plot mostly unchanged.
Fed Chair Powell
acknowledged the current uncertainty around Trump’s policies and the inflation
outlook but confirmed that the economy remains healthy, and the Fed is in a
good position to wait for more clarity.
The data remains in focus.
The next key event is scheduled for Monday when we get the US Flash PMIs which
coupled with the UMich inflation expectations triggered the growth scare last
month.
On the GBP side, the BoE kept
interest rates steady yesterday as expected with an 8-1 vote split compared
to 7-2 expected. Overall, it was a less dovish than expected decision and the
market is now seeing just 44 bps of easing by year end versus 53 bps before the
decision. The data continues to put the BoE in an uncomfortable position given
the high wage growth and sticky inflation.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD continues to lose momentum as the pair can’t break above 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
GBPUSD 4 hour
On the 4 hour chart, we can
see that the price broke below the bottom trendline of the rising channel. This
might give the sellers more confidence to pile in for a deeper pullback into
the 1.28 handle. The buyers, on the other hand, will want to see the price rising
back into the channel to start targeting new highs.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see that we have a downward trendline defining the bearish momentum on this
timeframe. The sellers will likely lean on the trendline to keep pushing into
new lows, while the buyers will look for a break higher to pile in for a rally
into the 1.3050 level next. The red lines define the average daily range for today.
