GBPUSD Technical Analysis – New lows expected


  • The Fed hiked by 25 bps as
    expected and kept everything unchanged at the last meeting.
  • Fed Chair Powell reaffirmed their data dependency
    and kept all the options on the table.
  • The US CPI
    yesterday came in line with expectations, so the market’s pricing remained
    roughly the same.
  • The labour market
    displayed signs of softening although it remains fairly solid.
  • Last week the ISM Services PMI and Jobless Claims
    surprised to the upside, which point to a resilient economy overall.
  • Yesterday, we got yet another beat in Jobless Claims followed
    by strong Retail Sales and PPI data.
  • The Fed members are leaning more towards a pause in
    September and the next decision will still be dictated by the economic data.
  • The market doesn’t expect the Fed to hike at the
    September meeting and there’s just a 33% chance of a hike in November, although
    that can change if the data keeps on running hot.


  • The BoE hiked by 25 bps as expected at the last
  • The central bank seems to be leaning
    more on the less hawkish side as a key line in the statement was tweaked to
    indicate the propensity for a “high for longer” stance rather than keeping with
    additional rate hikes.
  • Key economic data like the latest employment report showed a very high wage growth
    despite the rising unemployment rate, and the UK CPI beat expectations the last time pointing to a
  • The UK PMIs recently missed expectations across the board
    with the Services sector plunging into contraction.
  • The market expects the BoE to hike
    by 25 bps at the upcoming meeting.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD is in a
clear downtrend with the price printing lower lows and lower highs and the moving averages being
crossed to the downside. After the break of the key 1.2593 support, the
price started to fall in a sustained way as the US data kept on surprising to
the upside and the UK data deteriorated.

From a risk management perspective, the sellers
would be better off if the price pulled back into the downward trendline where we
have also the confluence with the
red 21 moving average to position for another selloff with a tight risk, but
it’s hard to see a reason for such a big pullback given the state of things.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the price can either pull back into the support turned resistance around
the 1.2440 level or the swing high at 1.2540 where we can also find the 38.2% Fibonacci retracement level
for confluence.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see the
resistance around the 1.2440 level where we have also the 38.2% Fibonacci
retracement level. This is where the sellers should pile in with a defined risk
above the resistance to position for a fall into the 1.2310 level.
Alternatively, if the price breaks through the resistance, the sellers will be
waiting around the 1.2540 level where they will have an even better risk to
reward setup. The buyers, on the other hand, will want to see the price
breaking resistances to pile in and ride the pullbacks.

Upcoming Events

Today the only notable
report left to be released for this week is the University of Michigan Consumer
sentiment survey. Consumer sentiment might have deteriorated given higher
energy prices and that might have filtered to higher inflation expectations.

This article was written by FL Contributors at Source