GBPUSD Technical Analysis – Bullish Bias Intact

Last week the US CPI report missed across the board and led to a
strong rally in GBPUSD as the market priced out the more hawkish path for the
Fed and now expects the July hike to be the last one. The resilient labour
market and the rising consumer sentiment has also increased the chances of
getting a soft landing which contributed to the positive risk sentiment.

Conversely, the UK employment report recently missed expectations
on the jobs side but showed another upside surprise on the wages side. This should
keep the BoE on track to hike interest rates with the CPI report this week being
the decision maker between a 25 bps increase or another 50 bps hike.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that since bouncing
on the red 21 moving average, GBPUSD
has been rallying with almost no pullbacks. After reaching the 1.3142 high, the
pair finally started to pull back a bit as the price got too much overstretched
as depicted by the distance from the blue 8 moving average. We can generally
see some consolidation or a pullback into the moving average before another
major move.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
pulled back into the red 21 moving average where we found already the buyers
stepping in with a defined risk below the moving average and possibly the 1.35
handle as target. The sellers will need the price to fall below the 21 moving
average to get some conviction and target a deeper pullback into the 1.2847 support.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has broke out of a falling channel today and the moving averages have
crossed to the upside. This is a signal that the bullish momentum is picking up
and we may see already a new high today. For confirmation, the buyers may wait
for the price to take out the previous swing high at 1.3108 before piling in
more aggressively. The sellers, on the other hand, will need to see the price
to fail this breakout and fall below the black trendline to
pile in and extend the pullback into the 1.2847 level.

Upcoming Events

Today the main event is
the US Retail Sales report. The current positive risk sentiment should give the
buyers an opportunity to buy the dip in case the data beats expectations and
increase the buying pressure in case the data misses. We should see a bigger
selloff only if the data comes much lower than expected, leading to some
general risk off sentiment. In the following days we will see the UK CPI report
tomorrow and the US Jobless Claims on Thursday.

This article was written by FL Contributors at Source