GBPUSD Technical Analysis Short term opportunities inside the long term range

GBPUSD Technical Analysis Short term opportunities inside the long term 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 US PPI missed expectations across the board supporting the disinflationary impulse.The labour market continues to soften although Initial Claims keep on hovering around cycle lows while Continuing Claims are ranging 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 March 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 May 2024GBPUSD Technical Analysis – Daily TimeframeOn the daily chart, we can see that GBPUSD has been consolidating between the 1.26 support and the 1.28 resistance as the lack of a clear divergence between the two central banks has led to a rangebound price action. There’s not much to glean from this timeframe, so we need to zoom in to find some more clarity. GBPUSD Technical Analysis – 4 hour TimeframeOn the 4 hour chart, we can see that the pair sold off in the APAC session with some risk off flows but the price got a bit 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. Given the rejection from the 1.28 resistance, the sellers might be in control at the moment and the natural target should be the 1.26 support. GBPUSD Technical Analysis – 1 hour TimeframeOn the 1 hour chart, we can see that we have a good resistance zone around the 1.2710 level where we can find the confluence with the downward trendline, the 61.8% Fibonacci retracement level and the red 21 moving average. This is where we can expect the sellers to step in with a defined risk above the trendline to target the 1.26 support. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into the 1.28 resistance. Upcoming EventsToday, we have the UK labour market report on the agenda and later in the day all eyes will be on Fed's Waller as the market will be eager to see if he decides to pushback against the aggressive rate cuts expectations. Tomorrow, we will get the UK CPI data while later in the day we will see the latest US Retail Sales report. On Thursday, we will get the US Jobless Claims figures while on Friday we conclude the week with the UK Retail Sales and the University of Michigan Consumer Sentiment survey. This article was written by FL Contributors at www.forexlive.com.