GBPUSD Technical Analysis – Key levels in play ahead of the BoE decision | Forexlive

USD

• The Fed left interest rates unchanged as expected while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
• Fed Chair Powell stressed that they want to see more evidence of inflation falling back to target and that a rate cut in March is not their base case.
• The latest US GDP beat expectations by a big margin.
• The US PCE came mostly in line with expectations with the Core 3-month and 6-month annualised rates falling below the Fed’s 2% target.
• The US Job Openings surprised to the upside although the hiring and quit rates remain below pre-pandemic levels.
• The latest US PMIs beat expectations by a big margin for both the Manufacturing and Services measures.
• The US Retail Sales beat expectations across the board.
• The US Consumer Confidence report came in line with expectations, but the labour market details improved considerably.
• The market now expects the first rate cut in May.

GBP

• The BoE left interest rates unchanged as expected at the last meeting with no dovish language as they reaffirmed that they will keep rates high for sufficiently long to return to the 2% target.
• The latest employment report showed job losses in December and lower than expected wage growth.
• The UK CPI beat expectations across the board, which is going to reinforce the BoE’s neutral stance.
• The latest UK PMIs showed the Manufacturing sector improving but remaining in contraction while the Services sector continues to expand.
• The latest UK Retail Sales missed expectations across the board by a big margin as consumer spending remains weak.
• The market expects the BoE to start cutting rates in May.

GBPUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that GBPUSD keeps trading inside the range between the 1.2610 support and 1.2800 resistance. The price is currently approaching the support level where we can expect the buyers to step in with a defined risk below the level to position for another rally into the resistance. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the next support around the 1.25 handle.

GBPUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price yesterday rallied into the downward trendline and got rejected as the sellers stepped in to position for a drop into the support. The momentum then picked up as the Fed resulted a bit more hawkish than expected and today, we can expect some action around the support as we get the BoE rate decision and some key US data.

GBPUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a steep downward trendline defining the current bearish impulse. If we do see a bounce from the support, we can expect even more buyers piling in on a break above the trendline as a confirmation for a change in momentum.

Upcoming Events

Today we have the BoE rate decision where the central bank is expected to keep everything unchanged and later on, we will see the latest US Jobless Claims figures and the ISM Manufacturing PMI. Tomorrow, we conclude the week with the US NFP report.

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• Source: https://www.forexlive.com/technical-analysis/gbpusd-technical-analysis-key-levels-in-play-ahead-of-the-boe-decision-20240201/