GBPUSD Technical Analysis – Is this a breakout or a fakeout?

<p>US</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 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 <a href="https://www.forexlive.com/news/us-september-pce-core-37-vs-37-expected-20231027/">US Core PCE</a> last
week came in line with expectations. </li><li>The <a href="https://www.forexlive.com/news/us-august-non-farm-payrolls-187k-vs-170k-expected-20230901/">labour market</a> remains
pretty resilient but we are starting to see some weakness as <a href="https://www.forexlive.com/news/us-initial-jobless-claims-210k-vs-208k-estimate-20231026/">Continuing Claims</a> missed
expectations once again last week pointing to an upward trend. </li><li>The <a href="https://www.forexlive.com/news/us-employment-cost-index-at-for-q3-11-versus-10-expectation-20231031/">US Employment Cost
Index</a> showed that wage growth picked up in Q3.</li><li>The <a href="https://www.forexlive.com/news/us-october-consumer-confidence-1026-vs-1000-expected-20231031/">US Consumer
Confidence</a> fell for the third consecutive month
although the data beat expectations.</li><li>The <a href="https://www.forexlive.com/news/us-september-ism-manufacturing-pmi-467-vs-490-expected-20231101/">US ISM
Manufacturing PMI</a> yesterday missed by a big margin.</li><li>The market doesn’t expect the Fed to hike anymore.</li></ul><p>UK</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 today.</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>BoE <a href="https://www.forexlive.com/centralbank/boes-bailey-inflation-is-still-too-high-20231102/">Governor
Bailey</a> repeated 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-september-payrolls-change-11k-vs-0k-prior-20231017/">employment report</a> showed a slowdown in wage growth
and some job losses in September which could point to a softening labour
market. </li><li>The recent <a href="https://www.forexlive.com/news/uk-september-cpi-67-vs-66-yy-expected-20231018/">UK CPI</a> slightly beat expectations but given the
softening in the labour market it’s unlikely to change the BoE’s stance. </li><li>The <a href="https://www.forexlive.com/news/uk-october-flash-services-pmi-492-vs-493-expected-20231024/">UK PMIs</a> showed further contraction in the services
sector, which accounts for 80% of UK’s economic activity.</li><li>The market doesn’t expect the BoE to
hike anymore.</li></ul><p>GBPUSD Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see that the GBPUSD pair
is currently breaking out of the <a href="https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/">trendline</a>. The
buyers are likely to pile in with a defined risk below the most recent low and
target the 1.23 <a href="https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/">resistance</a>. The
sellers, on the other hand, are likely to wait around the 1.23 handle to step
in with a defined risk above it and position for a drop into the 1.1840 level. </p><p>GBPUSD Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see more closely the
breakout of the trendline following the BoE rate decision and especially the
weaker US economic data. The price has been printing higher highs and higher
lows, so the current market structure on this timeframe is bullish. The sellers
might still try to fade the move buying the USD as a safe haven, but the odds
are more in favour of the buyers at the moment. </p><p>GBPUSD Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see that if we
were to get a pullback, the buyers should lean on the minor upward trendline
where they will also find the red 21 <a href="https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/">moving average</a> and
the 50% <a href="https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/">Fibonacci
retracement</a> level for <a href="https://www.forexlive.com/Education/technical-analysis-confluence-20220318/">confluence</a>. The
sellers, on the other hand, will want to see the price breaking lower and
falling back below the major downward trendline to invalidate the bullish setup
and position for a drop into new lows. </p><p>Upcoming Events</p><p><a href="https://www.forexlive.com/EconomicCalendar">Tomorrow</a>, we conclude the week with the US NFP report
and the ISM Services PMI. </p>

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