GBPUSD Technical Analysis – Key levels in play | Forexlive

USD

• The Fed left interest rates unchanged as expected
  at the last meeting with basically no change to the statement.
• Fed Chair Powell stressed once again that they are
  proceeding carefully as the full effects of policy tightening have yet to be
  felt.
• The US Core PCE yesterday came in line
  with forecasts with the disinflationary progress continuing steady.
• The labour market is starting to show weakness as Continuing
  Claims are now rising at a fast pace and the recent NFP report missed across
  the board.
• The latest US PMIs came basically in line
  with expectations with a miss in the Manufacturing index and a beat in the
  Services measure.
• The US Consumer Confidence this week beat
  expectations although the details about the labour market continued to weaken.
• The hawkish Fed members recently shifted
  their stance to a more neutral position.
• The market doesn’t expect the Fed to hike anymore.

GBP

• The BoE kept interest rates
  unchanged as expected at the last meeting.
• The central bank is leaning towards
  keeping interest rates “higher for longer”, although it keeps a door open for
  further tightening if inflationary pressures were to be more persistent.
• The BoE members continue to repeat
  that they will keep rates high for long enough to get inflation back to target.
• The latest employment report beat
  expectations with wage growth remaining at elevated levels.
• The UK CPI missed expectations
  across the board, which was a welcome development for the BoE.
• The UK PMIs last week beat
  expectations on both the Manufacturing and Services measures, with the Services
  sector crawling back in expansion.
• The latest UK Retail Sales missed
  expectations across the board by a big margin as consumer spending remains
  weak.
• The market doesn’t expect the BoE to
  hike anymore.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD recently
broke through the key resistance around the 1.26 handle where we had also the
50% Fibonacci retracement level for confluence. The pair managed to extend the
rally to the 1.12750 level where it got rejected from the 61.8% Fibonacci
retracement level of the entire fall from the cycle high. The sellers will now
want to see the price falling back below the 1.26 handle to pile in and target
new lows.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair has
been diverging with the MACD for quite some time as it approached the key
resistance level. This is generally a sign of weakening momentum often followed
by pullbacks or reversals. In this case, the buyers are likely to lean on the
trendline and the previous resistance that now might act as support. The
sellers, on the other hand, will want to see the price breaking lower to
position for a drop into new lows.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bullish setup around the trendline and the support level. What
happens here will likely decide where the pair will go in the next few weeks. A
bounce and a break above the 1.2670 level should confirm another rally, while a
break below the trendline and the support is likely to trigger a selloff into
the 1.24 handle.

Upcoming Events

Today, the main event will
be the release of the US ISM Manufacturing PMI which missed expectations by a
big margin the last time. A strong report is likely to give another boost to
the US Dollar while weak figures could weigh on the greenback in the short term.