GBPUSD Technical Analysis – The pair broke a key level


  • The Fed left interest rates unchanged as
  • The macroeconomic projections were revised higher
    as the economy showed much stronger resilience than expected and the Dot Plot
    showed that the majority of members still expects another rate hike by the end
    of the year with less rate cuts in 2024.
  • Fed Chair Powell
    reaffirmed their data dependency but added that they will proceed carefully as
    they are trying to find the optimal level of rates. Powell also added that the
    soft landing is not the base case at the moment, although they are aiming for
  • The latest US CPI 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 as seen also
    yesterday with the strong beat in Jobless Claims.
  • The market doesn’t expect the Fed to hike again at
    the moment.


  • The BoE kept interest rates unchanged.
  • The central bank is leaning more towards
    keeping interest rates “higher for longer” but it kept a door open for further
    tightening if inflationary pressures were to be more persistent.
  • Key economic data like the latest employment report showed a very high wage growth
    despite the rising unemployment rate, but the latest UK CPI missed expectations across the board.
  • The UK PMIs last month missed expectations across the
    board with the Services sector plunging into contraction.
  • The market doesn’t expect the BoE to
    hike anymore.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD has
eventually breached the key 1.23 level, and this has opened the door for a fall
into the 1.18 handle. The price now looks overstretched although fundamentally
there’s nothing left to sustain the GBP. From a risk management perspective,
the sellers would have a better risk to reward setup if the price pulled back
all the way up to the downward trendline where we
can also find the red 21 moving average for confluence. Such a
big rally though is hard to envision at the moment.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair has
been respecting the minor downward trendline with the last selloff coming off
of the trendline following the more hawkish than expected FOMC dot plot. If we
get a pullback, the sellers are likely to lean on the minor trendline again
where we can also find the confluence with the red 21 moving average and the Fibonacci retracement levels.
The buyers, on the other hand, are likely to step in here with a defined risk
below the low to position for a rally and increase the bullish momentum if the
price breaks above the minor trendline.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bearish setup with the key support at
1.2308 now turned resistance and the trendline. The sellers are likely to
remain in control and pile in on every pullback. The buyers, on the other hand,
are likely to pile in at every breakout.

Upcoming Events

Today we have the UK
Retail Sales and the Flash PMIs for both the UK and the US.

This article was written by FL Contributors at Source