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 recent US ISM Manufacturing PMI missed
expectations by a big margin, followed by a disappointing ISM Services PMI,
although the latter remained in expansion. - The 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 this 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 showed
a slowdown in wage growth and some job losses in September which are pointing
to a softening labour market. - The recent UK CPI slightly beat
expectations but given the softening in the labour market it’s unlikely to
change the BoE’s stance. - The UK PMIs showed further
contraction in the services sector, which accounts for 80% of UK’s economic
activity. - The UK Retail Sales today missed
expectations by a big margin across the board as consumer spending remains
subdued. - The market doesn’t expect the BoE to
hike anymore.
GBPUSD Technical Analysis –
Daily Timeframe
GBPUSD Daily
On the daily chart, we can see that GBPUSD surged
to new highs following the miss in the US CPI report. The price soon after
started to pull back as the pair got overstretched 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. In
the short term, the bias remains bullish as the price has been printing higher
highs and higher lows with the moving average being crossed to the upside.
GBPUSD Technical Analysis –
4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can see more closely the
current pullback. We can also notice that the latest leg higher diverged with
the MACD, which is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, we might see a pullback all the way down
to the trendline where we can find the 1.23 support and the 61.8% Fibonacci
retracement level for confluence. This is where the buyers are likely to step
in with a defined risk below the trendline to position for another rally into
the 1.26 handle. The sellers, on the other hand, will want to see the price
breaking below the trendline to increase the bearish bets and target new lows.
GBPUSD Technical Analysis –
1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can see that at
the moment the price might be stuck in a range between the 1.2450 resistance
and the 1.2375 support. If the price breaks below the support, we can expect
more sellers piling in and target the trendline. Conversely, a break above the
resistance should see more buyers coming into the market to extend the rally
into the 1.26 handle.