GBPUSD Technical Analysis – Key levels in play ahead of the UK jobs data

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 NFP report
    beat expectations across the board by a big margin.
  • The ISM Manufacturing
    PMI

    surprised to the upside with the new orders index, which is considered a
    leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat
    expectations across the board with the employment sub-index erasing the prior
    drop and prices paid jumping above 60.
  • 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
    removing the tightening bias but reaffirming 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 gives
    the BoE a reason to remain patient.
  • 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 June.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD broke
out of the range following the strong US NFP report and pulled back to retest
the support now turned resistance around
the 1.2612 level. The price broke above the resistance but
nonetheless the sellers managed to cap the gains as the pair started to
consolidate between the blue 8 moving average and the
1.2612 level. There’s not much else to see here, so we need to zoom in to get
some more clarity.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair has
been compressing around the 1.2612 level and the price action formed what looks
like an ascending triangle. The
price can break on either side of the pattern but what follows next is
generally a strong and sustained move in the direction of the breakout.
Therefore, the buyers will want to see the price breaking higher to position
for a rally into the 1.28 resistance. The sellers, on the other hand, will want
to see the price breaking lower to position for a drop into the lows.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the pair ranging between the 1.2612
support and the 1.2642 resistance. We can notice that the price has already
broken the triangle to the downside, but we will need also a break below the
support zone to confirm the breakout. Watch out for the data today as it will
add extra confirmation for a breakout on either side.

Upcoming Events

Today we have the UK jobs data in the morning and
later in the day the main event of the week, that is, the US CPI report.
Tomorrow, we will see the UK CPI report while on Thursday it will be the time
for the latest US Jobless Claims figures and the US Retail Sales. Finally, on
Friday, we conclude the week with the UK Retail Sales in the morning and the
later in the day, the US PPI data and the University of Michigan Consumer
Sentiment survey.

This article was written by FL Contributors at www.forexlive.com. Source