Fundamental Overview
The USD got a boost from the
FOMC decision as the market perceived it as more hawkish than expected. Overall, apart from some slight tweaks, the Fed matched the market’s pricing. Nonetheless, the market reacted in a big way pushing Treasury yields higher and giving the USD a tailwind.
The data is what really matters now as it will decide what the Fed is going to do. They switched their focus on inflation again, so it will likely take just one soft CPI report in January to see the market reacting in a dovish way sending Treasury yields and the US Dollar lower.
On the GBP side,
BoE kept the Bank Rate unchanged yesterday as expected although we got a more dovish than expected vote split as 3 voters wanted a rate cut compared to just 1 expected.
The market is pricing a 55% chance of no change at the upcoming meeting in February and a total of 56 bps of easing by the end of 2025 which is slightly more than it was before the BoE decision.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD eventually fell all the way back to the November low around the 1.2485 level. This is where we can expect the buyers to step in with a defined risk below the level to position for a rally into the 1.28 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.23 handle next.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong
resistance zone now around the 1.26 handle. From a risk management perspective, the sellers will have a better risk to reward setup around the resistance, while the buyers will look for a break higher to increase the bullish bets into the 1.28 handle.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as the buyers will look for a pullback into the 1.26 handle, while the sellers will look for a break lower or wait for the pullback to short at better levels. The red lines define the
average daily range for today.
Upcoming Catalysts
Today, we conclude the week with the US PCE data.
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
