GBPUSD Technical Analysis – The bias has turned more bullish


  • The Fed left interest rates unchanged as
    expected with basically no change to the statement.
  • Fed Chair Powell stressed
    once again that they are proceeding carefully as the full effects of policy
    tightening have yet to be felt.
  • The recent US Core PCE came
    in line with expectations.
  • The labour market is
    starting to show some weakness as Continuing Claims are now
    rising at a fast pace and the NFP data
    last Friday missed across the board.
  • The US Consumer
    fell for the third consecutive month
    although the data beat expectations.
  • The US ISM
    Manufacturing PMI
    last week missed expectations by a big
    margin, followed later on Friday with a disappointing ISM Services PMI,
    although the index remained in expansion.
  • The market doesn’t expect the Fed to hike anymore.


  • The BoE kept interest rates unchanged as expected last week.
  • The central bank is leaning towards
    keeping interest rates “higher for longer”, although it keeps a door open for
    further tightening if inflationary pressures were to be more persistent.
  • BoE Governor Bailey repeated that they will keep rates
    high for long enough to get inflation back to target.
  • The latest employment report showed a slowdown in wage growth
    and some job losses in September which are pointing to a softening labour
  • The recent UK CPI slightly beat expectations but given the
    softening in the labour market it’s unlikely to change the BoE’s stance.
  • The UK PMIs showed further contraction in the services
    sector, which accounts for 80% of UK’s economic activity.
  • The market doesn’t expect the BoE to
    hike anymore.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the GBPUSD pair
broke out of the key trendline and the resistance around
the 1.23 handle. The bias has now turned more bullish. The recent strong rally
made the price to overstretch though 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 a continuation.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a good
support zone around the previous resistance now turned support where
there’s also the 38.2% Fibonacci retracement level and the red 21 moving
average for confluence. The
buyers are likely to step in around this level with a defined risk below it to
position for another rally into the 1.25 handle. The sellers, on the other
hand, will want to see the price breaking lower to increase the bearish bets
and target the previous lows.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have also an upward trendline adding an extra layer of confluence to the
support zone around the 1.23 handle. If we get a bounce, the buyers should
maintain the conviction to target new higher highs, but if the price breaks
lower, the sellers are likely to get back control and take the GBPUSD pair back
to the lows.

Upcoming Events

This week is pretty empty on the data front with just
the US Jobless Claims on Thursday and the University of Michigan Consumer
Sentiment on Friday. The market is likely to focus on the US Jobless Claims on
Thursday given the recent weakness in the labour market data.

This article was written by FL Contributors at Source