GBPUSD Technical Analysis – Bullish

The US CPI report missed expectations across the board
causing a big weakening in the US Dollar. The market started to price out
additional rate hikes in the future but maintained the July rate hike odds
unchanged. This may be due to the tightness in the labour market and the lack
of hints of another skip or pause from Fed members after the CPI release.

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 the
next week being the decision maker between a 25 bps increase or another 50 bps

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that since the
bounce on the red 21 moving average, GBPUSD
rallied with almost no pullbacks. The price is now overextended though as
depicted by the distance from the blue 8 moving average. Generally, we can see
some consolidation or a pullback into the moving average before the resumption
in the trend.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we had a minor
pullback once the price hit the previous high at 1.2847 and the following
bounce from the previous swing high level. The price then took off and went
parabolic. The moving averages should act as dynamic support for the current
trend and the buyers are likely to lean on them to position for more higher

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that from
a risk management perspective, the buyers would be better off to wait for a
pullback into the black trendline where
they will have the confluence of the Fibonacci
retracement levels, the 1.30 round number and the
4-hour red 21 moving average. The sellers, on the other hand, will want to wait
for the price to break below the trendline to start piling in and target the
1.2847 support.

Upcoming Events

Today the only notable
data on the docket is the University of Michigan Consumer Sentiment report.
Only big deviations are likely to be market moving and the market is likely to
focus particularly on the inflation expectations figures.

This article was written by FL Contributors at Source