GBPUSD Technical Analysis – Watch what happens around this key level | Forexlive

USD

The Fed left interest rates unchanged as expected with a shift in the statement that
indicated the end of the tightening cycle.
The Summary of Economic Projections showed a
downward revision to Growth and Core PCE in 2024 while the Unemployment Rate
was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts
in 2024 compared to just two in the last projection.
Fed Chair Powell didn’t push back against the strong dovish pricing
and even said that they are focused on not making the mistake of holding rates
high for too long, which implies a rate cut coming soon.
The US CPI this week came in line with expectations
with the disinflationary progress continuing steady. This was also confirmed by
the US PPI the day after where the data missed
estimates.
The labour market has been showing signs of
weakening lately but we got some strong releases recently with the US Jobless Claims and the NFP coming
in strongly.
The latest ISM Manufacturing PMI missed expectations falling further into
contraction, while the ISM Services PMI beat forecasts holding on in expansion.
The market expects the Fed to start cutting rates
in Q1 2024.

GBP

The BoE left interest rates unchanged as expected with no dovish language
as they reaffirmed that they will keep rates high for sufficiently long to
return to the 2% target.
Governor Bailey pushed back against rate cuts
expectations as he said that they cannot say if interest rates have
peaked.
The latest employment report missed forecasts with wage growth
coming in much lower than expected and job losses in November.
The recent UK CPI missed expectations across the board, which was
a welcome development for the BoE.
The UK PMIs 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 expects the BoE to start
cutting rates in Q2 2024

GBPUSD Technical Analysis –
Daily Timeframe

GBPUSD Daily

On the daily chart, we can see that GBPUSD yesterday
broke above the resistance as the
BoE kept its hawkish language in stark divergence with the Fed which turned
more dovish the day before. We can also notice that this latest leg higher is diverging with the
MACD right
when it’s breaking out. This is generally a sign of weakening momentum often
followed by pullbacks or reversals.

GBPUSD Technical Analysis –
4 hour Timeframe

GBPUSD 4 hour

On the 4 hour chart, we can see that the price got
a bit overstretched to the upside as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move. The buyers are likely to lean on the broken
resistance and the 61.8% Fibonacci retracement level to
position for another rally. The sellers, on the other hand, will want to see
the price breaking lower to position for a drop back into the 1.26 handle.

GBPUSD Technical Analysis –
1 hour Timeframe

GBPUSD 1 hour

On the 1 hour chart, we can see more
closely the current price action with the pair consolidating near the broken
resistance zone that now will act as support. We can also see that the buyers
have the red 21 moving average for confluence right at the support zone. What
happens around this zone will likely determine where the pair will go in the
next few weeks.