GBPUSD Technical Analysis – Short term opportunities inside the long term range

<p>USD</p><ul><li>The Fed <a href="https://www.forexlive.com/news/fomc-decision-no-change-to-rates-2024-median-dot-46-vs-49-expected-20231213/">left interest rates unchanged</a> as expected at the last meeting with a shift in
the statement that indicated the end of the tightening cycle. </li><li>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. </li><li><a href="https://www.forexlive.com/centralbank/powell-qa-noted-that-officials-talked-about-path-for-cuts-today-20231213/">Fed Chair Powell</a> 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.</li><li>The latest <a href="https://www.forexlive.com/news/us-december-core-cpi-39-yy-versus-38-yy-expected-20240111/">US CPI</a> slightly beat expectations but analysts
expect the Core PCE to print at 0.2% M/M again following the CPI data. </li><li>The <a href="https://www.forexlive.com/news/us-december-ppi-10-vs-13-expected-20240112/">US PPI</a> missed expectations across the board
supporting the disinflationary impulse.</li><li>The labour market continues to soften although <a href="https://www.forexlive.com/news/us-initial-jobless-claims-202k-vs-210k-estimate-20240111/">Initial Claims</a> keep on hovering around cycle lows while
Continuing Claims are ranging at a higher level. </li><li>The latest <a href="https://www.forexlive.com/news/us-december-ism-manufacturing-pmi-474-vs-471-expected-20240103/">ISM Manufacturing PMI</a> beat expectations, while the <a href="https://www.forexlive.com/news/us-december-ism-services-506-vs-526-expected-20240105/">ISM Services PMI</a> missed by a big margin. </li><li>The hawkish Fed members have been leaning
on a more neutral side lately.</li><li>The market expects the Fed to start cutting rates
in March 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-20231214/">left interest rates unchanged</a> 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.</li><li><a href="https://www.forexlive.com/centralbank/boes-bailey-we-cannot-say-that-interest-rates-have-peaked-20231214/">Governor Bailey</a> pushed back against rate cuts
expectations as he said that they cannot state if interest rates have
peaked. </li><li>The latest <a href="https://www.forexlive.com/news/uk-november-payrolls-change-12k-vs-33k-prior-20231212/">employment report</a> missed forecasts with wage growth
coming in much lower than expected and job losses in November.</li><li>The <a href="https://www.forexlive.com/news/uk-november-cpi-39-vs-44-yy-expected-20231220/">UK CPI</a> missed expectations across the board, which is
another welcome development for the BoE.</li><li>The <a href="https://www.forexlive.com/news/uk-december-flash-services-pmi-527-vs-510-expected-20231215/">UK PMIs</a> showed the Manufacturing sector falling
further into contraction while the Services sector continues to expand. </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 May 2024</li></ul><p>GBPUSD Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see that GBPUSD has been
consolidating between the 1.26 <a href="https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/">support</a>
and the 1.28 resistance as the lack of a clear divergence between the two
central banks has led to a rangebound price action. There’s not much to glean
from this timeframe, so we need to zoom in to find some more clarity. </p><p>GBPUSD Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that the pair sold
off in the APAC session with some risk off flows but the price got a bit
overstretched as depicted by the distance from the blue 8 <a href="https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/">moving
average</a>. In such instances, we can generally see a pullback into the moving
average or some consolidation before the next move. Given the rejection from
the 1.28 resistance, the sellers might be in control at the moment and the
natural target should be the 1.26 support. </p><p>GBPUSD Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see that we
have a good resistance zone around the 1.2710 level where we can find the <a href="https://www.forexlive.com/Education/technical-analysis-confluence-20220318/">confluence</a>
with the downward <a href="https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/">trendline</a>,
the 61.8% <a href="https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/">Fibonacci
retracement</a> level and the red 21 moving average. This is where we can
expect the sellers to step in with a defined risk above the trendline to target
the 1.26 support. The buyers, on the other hand, will want to see the price
breaking higher to invalidate the bearish setup and position for a rally into
the 1.28 resistance. </p><p>Upcoming Events</p><p><a href="https://www.forexlive.com/EconomicCalendar">Today</a>, we have the UK labour market report on the agenda
and later in the day all eyes will be on Fed's Waller as the market will be
eager to see if he decides to pushback against the aggressive rate cuts
expectations. Tomorrow, we will get the UK CPI data while later in the day we
will see the latest US Retail Sales report. On Thursday, we will get the US
Jobless Claims figures while on Friday we conclude the week with the UK Retail
Sales and the University of Michigan Consumer Sentiment survey.</p>

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