USD
- The Fed left interest rates unchanged as expected 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 recent US CPI missed expectations across the board bringing the expectations for rate cuts forward.
- 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 US Consumer Confidence and University of Michigan Consumer Sentiment continue to fall.
- The latest US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
- The recent US Retail Sales beat expectations, while the US PPI missed forecasts by a big margin.
- The recent Fedspeak has been leaning on the hawkish side, but last week’s inflation report pretty much confirmed that the Fed might be done for the cycle.
- 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.
- BoE Governor Bailey repeated 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 is a welcome development for the BoE.
- The UK PMIs showed further contraction in the services sector, which accounts for 80% of UK’s economic activity.
- The 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 is getting closer to the key resistance around the 1.26 handle where we can also find the 50% Fibonacci retracement level for confluence. That’s where we can expect the sellers to step in with a defined risk above the resistance to position for a drop into the 1.23 support.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair is starting to diverge with the MACD right as it approaches the key resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we might see a selloff from the resistance into the 1.24 handle where the buyers should step in with a defined risk below the swing low and target a break above the 1.26 handle.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the bullish trend on this timeframe is intact and we can expect the buyers to lean on the minor trendline where they have also the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. The sellers, on the other hand, will want to see the price breaking lower to pile and target the 1.23 support.
Upcoming Events
This week is pretty empty on the data front with the US on holiday for Thanksgiving Day in the final part of the week. Today, we have the FOMC Meeting Minutes but it's unlikely to be market moving given that it's three-weeks old data. Tomorrow, we have the US Jobless Claims report which is probably going to be the most important release of the week. On Thursday, we have the UK PMIs while on Friday we conclude the week with the latest US PMIs.
