The USD was sold across the
board on Wednesday following the soft US CPI report. The data made the market to price back
in two cuts for this year. Later in the day though we got a bit more hawkish
than expected FOMC decision where the dot plot showed that the Fed sees just one cut for this
year despite the soft US CPI report.

This gave the greenback a
boost although Fed Chair Powell backpedalled on the projections making them a
bit less worrying as the central bank remains very data dependent. Moreover,
the US Dollar found further support yesterday as the market went into risk-off
mode for unclear reasons.

The GBP, on the other hand,
got under pressure mainly because of the risk-off sentiment and the US Dollar
strength. If we go back into risk-on, we should see the greenback losing ground
against the Pound again.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD spiked above the 1.28 handle following the soft US CPI release
but eventually gave back everything following the more hawkish than expected
FOMC decision and the risk-off sentiment.

The price is now trading around
a key support
zone at the 1.27 handle. A breakdown should open the door for new lows with the
first target coming around the 1.26 handle.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have the 38.2% Fibonacci retracement level of the entire rally since
April standing around the 1.2634 level which is going to be the first target
for the sellers in case the price breaks decisively below the 1.27 support zone.

The buyers, on the other
hand, will likely step in here at the 1.27 support zone with a defined risk
below it to position for a rally into new highs.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price is near the lower level of the average daily range. This is where we might see a
bounce as the price generally doesn’t extend beyond the level without a strong catalyst.

In case we get a pullback,
the sellers will likely lean on the minor downward trendline
and the 38.2% Fibonacci retracement level at 1.2740. The buyers, on the other
hand, will want to see the price breaking higher to gain even more confidence
and increase the bullish bets into new highs.

Upcoming
Catalysts

Today we conclude the week with the University of Michigan Consumer Sentiment
survey where the data is expected to show an increase to 72.0 vs. 69.1 prior.

This article was written by Giuseppe Dellamotta at www.forexlive.com.