GBPUSD Technical Analysis – Watch this key short-term resistance

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The Fed hiked interest rates by 25 bps yesterday as expected and left the
policy statement unchanged. The market wanted to see if Fed Chair Powell could
offer some hints on their next moves, but unfortunately, he just repeated that
they are data dependent and that all options are on the table for the September
meeting.

Conversely, the UK CPI last week missed expectations across the board
and triggered a big repricing in interest rates expectations. In fact, the
market was pricing a higher chance of a 50 bps hike prior to the report given
the higher wages data in the previous UK employment report. Now, the market sees a higher
chance that the BoE hikes by 25 bps at the upcoming meeting.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the price has
bounced on the previous swing high resistance turned support where we
had also the confluence with the red 21 moving average which
continues to be a great dynamic support. If this is the start of another rally,
the target should be the 1.33 handle.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we had also
the 61.8% Fibonacci retracement level
near the 1.2847 support. The
market structure now is bullish as the price keeps printing higher highs and
higher lows and the moving averages are crossed to the upside.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
already had signs of a possible pullback or reversal as the price was diverging with
the MACD
falling into the support zone. In fact, that’s a sign of weakening momentum and
we saw the sellers folding as the buyers outplayed them. The price is now
breaking above a key resistance level and the buyers should pile in even more
aggressively to target the 1.33 handle. The sellers, on the other hand, will
want to see the breakout failing and the price falling below the black trendline to
pile in and target a break below the 1.2847 support area.

Upcoming Events

Today the market will
focus on the US Jobless Claims data as the labour market strength is what keeps
the Fed on the hawkish side. A big beat should give the USD a tailwind, while a
big miss should weaken it even more. Tomorrow, the market will switch its
attention to the US PCE and ECI reports with the wages data likely to be more important.

This article was written by FL Contributors at www.forexlive.com.

Go to Forexlive

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