GBPUSD Technical Analysis – Playing the range

USD

• The Fed left interest rates unchanged as expected at the last meeting with a shift in
  the statement that indicated the end of the tightening cycle.
• The Summary of Economic Projections showed a
  downward revision to Growth and Core PCE in 2024 while the Unemployment Rate
  was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts
  in 2024 compared to just two in the last projection.
• Fed Chair Powell didn’t push back against the strong dovish pricing
  and even said that they are focused on not making the mistake of holding rates
  high for too long.
• The latest US CPI slightly beat expectations but analysts
  expect the Core PCE to print at 0.2% M/M again following the CPI data.
• The labour market continues to soften but remains
  resilient with US Jobless Claims beating expectations week after week.
• The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
• The US Retail Sales beat expectations across the board.
• The Fed members recently have been pushing
  back on the aggressive rate cuts expectations.
• The market expectation for a rate cut in March fell
  to roughly 50%.

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  with no dovish language as they reaffirmed that they will keep rates high for
  sufficiently long to return to the 2% target.
• Governor Bailey pushed back against rate cuts
  expectations as he said that they cannot state if interest rates have
  peaked.
• The employment report showed job losses in December and
  lower than expected wage growth.
• The UK CPI beat expectations across the board, which is
  going to reinforce the BoE’s neutral stance.
• The UK PMIs showed the Manufacturing sector falling
  further into contraction while the Services sector continues to expand.
• The latest UK Retail Sales missed expectations across the
  board by a big margin as consumer spending remains weak.
• The market expects the BoE to start
  cutting rates in Q2.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD fell
from the resistance zone
around the 1.28 handle following weaker UK data and strong US figures and
bounced on the key support around the 1.26 handle after the hot UK CPI report.
The price is now right in the middle of the range, so there’s not much more to
glean from this timeframe and we need to zoom in for further details.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4
hour chart, we can see that the moving averages crossed
to the upside and the price broke above the red 21 moving average. This should
be a signal that the bullish momentum is prevailing and there are higher
chances of seeing an extension into the resistance zone. The buyers are likely
to lean on the trendline where
they will also find the 21 moving average for confluence. The
sellers, on the other hand, will want to see the price breaking below the
trendline to position for a drop back into the support and target a break below
it.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the current price action and the bullish setup with the Fibonacci
retracement levels adding extra confluence. This
gives us two possible scenarios:

• The buyers will likely lean on the
  trendline expecting a bounce and target the resistance around the 1.28 handle.
• The sellers will wait until the price
  breaks below the trendline to pile in and target the 1.26 support.

Upcoming Events

Today, the only notable events will be the UK Retail
Sales and the University of Michigan Consumer Sentiment survey.