GBPUSD Technical Analysis – The bearish momentum remains strong

<p>US:</p><ul><li>The Fed <a href="https://www.forexlive.com/centralbank/the-fomc-keeps-the-target-fed-funds-range-at-525-to-550-20230920/">left interest rates unchanged</a> as
expected.</li><li>The macroeconomic projections were revised higher
as the economy showed much stronger resilience than expected and the Dot Plot
showed that the majority of members still expects another rate hike by the end
of the year with less rate cuts in 2024.</li><li><a href="https://www.forexlive.com/centralbank/highlights-from-the-fed-chair-powells-press-conference-after-september-rate-decision-20230920/">Fed Chair Powell</a>
reaffirmed their data dependency but added that they will proceed carefully as
they are trying to find the optimal level of rates. Powell also added that the
soft landing is not the base case at the moment, although they are aiming for
it.</li><li>The latest <a href="https://www.forexlive.com/news/us-august-cpi-06-mm-versus-06-mm-expected-20230913/">US CPI</a> came
in line with expectations, so the market’s pricing remained roughly the same. </li><li>The <a href="https://www.forexlive.com/news/us-august-non-farm-payrolls-187k-vs-170k-expected-20230901/">labour market</a> displayed
signs of softening although it remains fairly solid as seen also last week with
the strong beat in <a href="https://www.forexlive.com/news/us-initial-jobless-claims-201k-versus-225k-estimate-20230921/">Jobless Claims</a>. </li><li>The market doesn’t expect the Fed to hike again at
the moment.</li></ul><p>UK:</p><ul><li>The BoE <a href="https://www.forexlive.com/centralbank/boe-leaves-bank-rate-unchanged-at-525-vs-550-expected-20230921/">kept interest rates unchanged</a>.
</li><li>The central bank is leaning more towards
keeping interest rates “higher for longer” but it kept a door open for further
tightening if inflationary pressures were to be more persistent. </li><li>Key economic data like the latest <a href="https://www.forexlive.com/news/uk-august-payrolls-change-0k-vs-97k-prior-20230912/">employment report</a> showed a very high wage growth
despite the rising unemployment rate, but the latest <a href="https://www.forexlive.com/news/uk-august-cpi-67-vs-70-yy-expected-20230920/">UK CPI</a> missed expectations across the board.</li><li>The latest <a href="https://www.forexlive.com/news/uk-september-flash-services-pmi-472-vs-492-expected-20230922/">UK PMIs</a> showed further contraction, especially in the
Services sector.</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 since the 1.27
handle, the GBPUSD pair just kept on melting with very shallow pullbacks along
the way. The recent break of the swing level at 1.23 opened the door for a fall
into the 1.18 handle, which is the next strong <a href="https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/">support</a>. The
price at the moment is a bit overstretched though 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 the price pulling back into the moving average
or consolidate a bit before the next impulse. </p><p>GBPUSD Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that if we were to
get a pullback, there’s a good resistance around the 1.23 handle where we have
the <a href="https://www.forexlive.com/Education/technical-analysis-confluence-20220318/">confluence</a> with the
<a href="https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/">trendline</a>, the
38.2% <a href="https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/">Fibonacci retracement</a> level
and the daily blue 8 moving average. This is where we can expect the sellers to
pile in with a defined risk above the resistance to target the 1.18 handle. The
buyers, on the other hand, will want to see the price breaking above the
resistance to invalidate the bearish setup and position for a rally into the
major trendline around the 1.2450 level. </p><p>GBPUSD Technical Analysis –
1 hour Timeframe</p><p>On the 1 hour chart, we can see that we
have a <a href="https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/">divergence</a> with
the <a href="https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/">MACD</a> which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. From a risk management perspective, the sellers would have a much
better risk to reward trade if the price pulled back into the 1.23 handle. This
scenario is likely to happen only if the price breaks above the minor trendline
and the 1.2220 level. Otherwise, we might see bearish impulses from the minor
trendline onwards. </p><p>Upcoming Events</p><p><a href="https://www.forexlive.com/EconomicCalendar">Today</a> we will see the latest US Consumer Confidence
report which surprised to the downside the last time and weighed on the USD in
the short term as Treasury yields fell. On Thursday, we will have another US
Jobless Claims data which keeps on showing strength in the labour market
maintaining the hawkish pricing in interest rates expectations. Finally, on
Friday, we will get the latest US PCE data. </p>

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