GBPUSD Technical Analysis – Will it finally break out of the range?

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• Fed Chair Powell maintained a neutral stance as he said that it was
  premature to react to the recent inflation data given possible bumps on the way
  to their 2% target.
• The US CPI beat expectations for the third
  consecutive month.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The market now expects the first rate cut in
  September.

GBP

• The BoE left interest rates unchanged as expected but with Haskel and
  Mann this time voting for a hold instead of a hike.
• The employment report missed expectations with an uptick
  in the unemployment rate and an easing in wage growth.
• The UK CPI missed expectations across the board but with
  Services inflation remaining sticky, which continues to support the BoE’s
  patient stance.
• The latest UK PMIs showed the Services PMI missing expectations
  slightly and the Manufacturing PMI beating.
• The market expects the first rate
  cut in June.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD probed
above the red 21 moving average before
the US CPI report but got smacked back down hard following the data release.
The price is now back at the bottom of the range around the 1.25 handle. This
is where we can expect the buyers to step in with a defined risk below the support to
position for a rally back into the top of the range around the 1.28 handle. The
sellers, on the other hand, will want to see the price breaking out to increase
the bearish bets into the lows.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we got a
fakeout above the strong resistance zone around the 1.2670 level where we had
the confluence of the
previous swing levels, the trendline and the
daily 21 moving average. This is generally a reversal pattern, so we can expect
the sellers to sell any rally now as they target a breakout below the 1.25
support. The price got a bit overstretched yesterday 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.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we have
a possible resistance zone around the 1.2573 level where we can also find the
confluence with the red 21 moving average. This is where we can expect the
sellers to step in with a defined risk above the level to position for a
breakout below the 1.25 support. The buyers, on the other hand, will want to
see the price breaking higher to start targeting the trendline around the
1.2630 level.

Upcoming Events

Today we will have the US PPI report and the latest
US Jobless Claims figures. Tomorrow, we conclude the week with the UK GDP and
the University of Michigan Consumer Sentiment Survey.