GBPUSD Technical Analysis – This breakout might be a bad omen for the buyers

<p>USD</p><ul><li>The Fed left interest rates unchanged as expected
at the last meeting with basically no change to the statement.</li><li>Fed Chair Powell stressed once again that they are
proceeding carefully as the full effects of policy tightening have yet to be
felt.</li><li>The US Core PCE last week came in line
with forecasts with the disinflationary progress continuing steady. </li><li>The labour market continues to show weakness as Continuing
Claims are now rising at a fast pace with the last NFP report missing across
the board and this week’s Job Openings and ADP coming below forecasts.</li><li>The ISM Manufacturing PMI last week missed
expectations falling further into contraction, while the ISM Services PMI this
week beat forecasts holding on in expansion. </li><li>The hawkish Fed members recently shifted
their stance to a more neutral position.</li><li>The market expects the Fed to start cutting rates
as soon as Q1 2024. </li></ul><p>GBP</p><ul><li>The BoE kept interest rates
unchanged as expected at the last meeting.</li><li>The central bank is leaning towards
keeping interest rates “higher for longer”, although it keeps a door open for
further tightening if inflationary pressures were to be more persistent. </li><li>The BoE members continue to repeat
that they will keep rates high for long enough to get inflation back to target.
</li><li>The latest employment report beat
expectations with wage growth remaining at elevated levels. </li><li>The recent UK CPI missed
expectations across the board, which was a welcome development for the BoE.</li><li>The UK PMIs beat expectations on
both the Manufacturing and Services measures, with the Services sector crawling
back in expansion.</li><li>The latest UK Retail Sales missed
expectations across the board by a big margin as consumer spending remains
weak.</li><li>The market expects the BoE to start
cutting rates in Q2 2024</li></ul><p>GBPUSD Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see that <a href="https://fxgt.com/register?refid=FL_Articles">GBPUSD</a> broke
out of the range yesterday with the price eventually bouncing near the red 21
moving average. This breakout to the downside should give the sellers more
conviction to target a drop into the swing low around the 1.2375 level, while
the buyers will need the price to rise above the 50% Fibonacci retracement
level again to invalidate the breakout and leave behind a fakeout, which is
generally a reversal pattern. </p><p>GBPUSD Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that the pair has
been diverging with the MACD for quite some time as it approached the key
resistance levels. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, given the breakout of the
range to the downside, the odds for a drop into the 1.2375 support are higher.
The sellers should step in around the broken support now turned resistance to
target the next support. The buyers, on the other hand, will want to see the
price breaking higher again to invalidate the bearish setup and pile in for a
rally into the 1.2743 resistance. </p><p>GBPUSD Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see that on
this timeframe the sellers have also the confluence with the trendline, the 50%
Fibonacci retracement level and the red 21 moving average around the key 1.2590
level. What happens here is likely to determine where the pair will go in the
next few weeks. </p><p>Upcoming Events</p><p>Today we get the latest US
Jobless Claims figures where the market will want to see how fast the US labour
market is weakening. Tomorrow, we conclude the week with the US NFP report
which is going to be a big market moving event. We might be reaching a point
where bad US data is starting to weigh on the general risk sentiment, so that’s
something to watch out for if the USD gets bid even after weak figures. </p>

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