The US NFP last Friday has finally missed expectations
for the first time after 14 consecutive beats. The other details in the report
though were almost all good and the average hourly earnings ticked higher,
which is not what the Fed would want to see. In fact, the NFP report didn’t
change the market’s expectation for the next FOMC rate decision and a 25 bps
hike is still basically priced in.
Conversely, the UK
employment report this morning missed expectations on the jobs side but saw
another upside surprise on the wages side. This should keep the BoE on track to
hike interest rates and the CPI report the next week might decide if it’s going
to be a 25 bps increase or another 50 bps hike.
GBPUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that GBPUSD since
bouncing on the red 21 moving average,
extended the rally past the 1.2847 high and it’s now looking at the 1.30
handle. At the moment there’s no clear resistance level
where the sellers can lean on to and therefore it’s a buyers’ market. The price
would need to fall below the 1.2847 high to see more sellers piling in and
targe the trendline.
GBPUSD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the buyers
leant on the previous swing high level and the red 21 moving average to start a
rally towards the 1.30 handle. From a risk management perspective, the buyers
should now wait for the price to pull back into the 1.2847 resistance turned support before
engaging in new longs as the price has now overextended.
GBPUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the
we are starting to see a divergence with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In fact, as mentioned above, a good spot for the buyers to enter new
long positions would be the 1.2847 level where there’s also the red 21 moving
average for confluence. If
the price falls below that level, the sellers will start to pile in and target
the 1.2750 level first and the 1.26 handle next.
Upcoming Events
Tomorrow we
will see the latest US CPI report, which will be the main event of the week.
Higher than expected figures, especially on the core numbers, should support
the USD as the market will price in a more hawkish Fed. Conversely, if the data
misses expectations, we should see a weaker greenback in the short term as the
market will price out the probabilities of more hikes and even price in rate
cuts. After the CPI report we will finish the week with the US Jobless Claims
on Thursday and the University of Michigan Consumer Sentiment on Friday.
See also the video below:
This article was written by FL Contributors at www.forexlive.com. Source