GBPUSD Technical Analysis Playing the range

GBPUSD Technical Analysis Playing the range

USDThe Fed left interest rates unchanged as expected at the last meeting with a shift in the statement that indicated the end of the tightening cycle. The Summary of Economic Projections showed a downward revision to Growth and Core PCE in 2024 while the Unemployment Rate was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts in 2024 compared to just two in the last projection. Fed Chair Powell didn't push back against the strong dovish pricing and even said that they are focused on not making the mistake of holding rates high for too long.The latest US CPI slightly beat expectations but analysts expect the Core PCE to print at 0.2% M/M again following the CPI data. The labour market continues to soften although Initial Claims keep on hovering around cycle lows while Continuing Claims got stuck at a higher level. The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin. The hawkish Fed members have been leaning on a more neutral side lately.The market expects the Fed to start cutting rates in Q1 2024.GBPThe 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.Governor Bailey pushed back against rate cuts expectations as he said that they cannot state if interest rates have peaked. The latest employment report missed forecasts with wage growth coming in much lower than expected and job losses in November.The UK CPI missed expectations across the board, which is another welcome development for the BoE.The UK PMIs showed the Manufacturing sector falling further into 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 Q2 2024GBPUSD Technical Analysis – Daily TimeframeOn the daily chart, we can see that GBPUSD continues to consolidate around the highs as there’s not much policy divergence between the two central banks now given that the market expects both of them to start cutting rates soon. The sellers are likely to step in around the 1.28 handle to position for a drop into the recent support around the 1.26 handle as the rangebound price action is likely to continue. GBPUSD Technical Analysis – 4 hour TimeframeOn the 4 hour chart, we can see more closely the range between the 1.26 support and 1.28 resistance. The best strategy is generally to sit out and wait for a breakout supported by a fundamental catalyst, but one can also “play the range” by selling at resistance and buying at support. GBPUSD Technical Analysis – 1 hour TimeframeOn the 1 hour chart, we can see that the price action has been choppy and quite erratic. There are no clear levels where to lean on except the resistance zone around the 1.28 handle and the support zone around the 1.26 level. We have the UK GDP data in a few minutes but whatever the data will show, the pair is likely to reject the resistance given that it won’t be enough to change the big picture. Upcoming EventsToday the only notable events on the agenda are the UK GDP and the US PPI data. This article was written by FL Contributors at www.forexlive.com.