Fundamental Overview
The USD has been unusually resilient this week despite lots of negative catalysts. The
US PPI and
Core CPI came in on the softer side which saw the market increasing the easing expectations from 24 bps before the data to 37 bps after.
Moreover, yesterday
Fed’s Waller delivered some surprisingly dovish comments saying that a rate cut could come in the first half of this year if the inflation data continues to show improvement and that a March cut cannot be completely ruled out.
The market pricing increased to 42 bps by year end as a result which is now much closer to the 50 bps projected by the Fed.
On the GBP side, the
UK CPI report this week missed expectations across the board by a big margin and strengthened the markets expectations for a 25 bps cut at the upcoming BoE meeting. Moreover, the US Retail Sales today weighed further on the Pound as the data came in much worse than forecasts.
As a reminder, the
BoE kept the Bank Rate unchanged as expected at the last policy decision but we got a more dovish than expected vote split as 3 voters wanted a rate cut compared to just 1 expected. Policymakers continue to lean towards four rate cuts for this year compared to three rate cuts expected by the market.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD is still consolidating around the lows despite some negative USD news. From a risk management perspective, the sellers will have a better risk to reward setup around the major
trendline to position for further downside. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, there’s not much we can glean from this timeframe as the price action remains rangebound between two key levels, so we need to zoom in to see some more details.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a tight range between the 1.2160 support and 1.2250 resistance. The buyers will continue to step in around the support to position for a rally into the major trendline, while the sellers will look for a break lower to increase the bearish bets into new lows. The red lines define the
average daily range for today.
Upcoming Catalysts
Today, we have the US Housing Starts and Building Permits, and the US Industrial Production and Capacity Utilization.
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
