GBPUSD Technical Analysis – Watch what happens around this key resistance

<p>USD</p><ul><li>The Fed <a href="https://www.forexlive.com/centralbank/federal-reserve-interest-rate-decision-no-change-20231101/">left interest rates unchanged</a> as
expected at the last meeting with basically no change to the statement.</li><li><a href="https://www.forexlive.com/centralbank/powell-opening-statement-the-committee-is-proceeding-carefully-20231101/">Fed Chair Powell</a> stressed
once again that they are proceeding carefully as the full effects of policy
tightening have yet to be felt.</li><li>The latest <a href="https://www.forexlive.com/news/us-september-pce-core-35-vs-35-expected-20231130/">US Core PCE</a> came
in line with forecasts with the disinflationary progress continuing
steady. </li><li>The labour market has been showing signs of
weakening lately but last week we got some strong releases with the <a href="https://www.forexlive.com/news/us-initial-jobless-claims-220k-versus-222k-estimate-20231207/">US Jobless Claims</a> and the <a href="https://www.forexlive.com/news/us-november-non-farm-payrolls-199k-vs-180k-expected-20231208/">NFP</a> coming
in strongly. </li><li>The latest <a href="https://www.forexlive.com/news/us-november-ism-manufacturing-pmi-467-vs-476-expected-20231201/">ISM Manufacturing
PMI</a>
missed expectations falling further into contraction, while the <a href="https://www.forexlive.com/news/us-november-ism-services-527-vs-520-expected-20231205/">ISM Services PMI</a> beat
forecasts holding on in expansion. </li><li>The <a href="https://www.forexlive.com/news/us-december-umich-consumer-sentiment-694-vs-620-expected-20231208/">University of
Michigan Consumer Sentiment</a> survey came in much better than
expected with inflation expectations tumbling.</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
in Q2 2024.</li></ul><p>GBP</p><ul><li>The BoE <a href="https://www.forexlive.com/centralbank/boe-leaves-bank-rate-unchanged-at-525-as-expected-20231102/">kept interest rates unchanged</a> as expected at the last meeting.</li><li>The central bank is leaning towards
keeping interest rates high 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 <a href="https://www.forexlive.com/news/uk-october-payrolls-change-33k-vs-11k-prior-20231114/">employment report</a> beat expectations with wage growth
remaining at elevated levels. </li><li>The recent <a href="https://www.forexlive.com/news/uk-october-cpi-46-vs-48-yy-expected-20231115/">UK CPI</a> missed expectations across the board, which was
a welcome development for the BoE.</li><li>The <a href="https://www.forexlive.com/news/uk-november-flash-services-pmi-505-vs-495-expected-20231123/">UK PMIs</a> beat expectations on both the Manufacturing
and Services measures, with the Services sector crawling back in expansion.</li><li>The latest <a href="https://www.forexlive.com/news/uk-october-retail-sales-03-vs-03-mm-expected-20231117/">UK Retail Sales</a> 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 GBPUSD broke
out of the recent range to the downside. The price bounced around the red 21 <a href="https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/">moving average</a> and it’s
now coming back to the broken <a href="https://www.forexlive.com/Education/technical-analysis-polarity-20220408/">support now turned resistance</a>. This
might end up in a classic “break and retest” pattern, so the sellers are likely
to step in around the <a href="https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/">resistance</a> with a
defined risk above it to position for a drop into the 1.2374 level. </p><p>GBPUSD Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that the pair has
been <a href="https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/">diverging</a> with the
<a href="https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/">MACD</a> for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, the breakout of the range to the downside
might have been a confirmation of a reversal with the targets standing around
the swing lows at 1.2374 and 1.2190. The buyers will want to see the price
getting back above the resistance to invalidate the bearish setup and position
for a rally into the 1.2750 level. </p><p>GBPUSD Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see more
closely the current price action with the pair approaching the key resistance
zone ahead of the UK employment report at the top of the hour. What happens
around this resistance will likely determine where the pair will go in the next
few weeks. A break to the upside should lead to a rally back into the 1.2750
resistance, while a rejection is likely to be followed by a drop into the 1.2374
level first, and upon a further break lower, the 1.2190 level. </p><p>Upcoming Events</p><p><a href="https://www.forexlive.com/EconomicCalendar">This week</a> is going to be a big one with the US CPI and
the FOMC and BoE rate decisions on the agenda. We begin today with the UK
Labour Market report, while later in the day we get the release of the US CPI
report where the market will want to see how the disinflationary trend is
going. Tomorrow, we have the US PPI data followed by the FOMC rate decision
where the Fed is expected to keep interest rates unchanged. On Thursday, we have
the BoE rate decision where the central bank is expected to keep rates
unchanged, while later in the day will see the US Retail Sales and Jobless
Claims figures. On Friday, we conclude the week with the UK and the US PMIs.</p>

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