GBPUSD Technical Analysis – The bias is turning bearish

<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-november-pce-core-inflation-32-vs-33-expected-20231222/">US PCE</a> missed expectations across the board with
the Core 6-month annualised rate falling below the Fed’s target at 1.9%. </li><li>The labour market has been softening via less job
opportunities rather than more layoffs with the <a href="https://www.forexlive.com/news/us-initial-jobless-claims-218k-vs-210k-estimate-20231228/">Initial Claims</a> hovering around cycle lows and Continuing Claims
remaining high. </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 market expects the Fed to start cutting rates
in Q1 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 say 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 Q2 2024</li></ul><p>GBPUSD Technical Analysis –
Daily Timeframe</p><p>On the daily chart, we can see that GBPUSD recently
broke the key <a href="https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/">trendline</a> opening
the door for more downside. We can see that the latest rallies formed what
looks like a <a href="https://www.forexlive.com/Education/chart-patterns-guide-20220125/">rising wedge</a> and have
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>. This is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, the target for the pullback should be the 1.25 handle
with a further break lower opening the door for much lower prices. </p><p>GBPUSD Technical Analysis –
4 hour Timeframe</p><p>On the 4 hour chart, we can see that the pair is
bouncing on the <a href="https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/">support</a> zone
around the 1.26 handle. The price was a bit overstretched anyway 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
fact, in such instances, we can generally see a pullback into the moving
average or some consolidation before the next move. The sellers should lean on
the broken trendline to position for another drop into the 1.25 handle, while
the buyers might increase their bullish bets if the price breaks to the upside.
</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 correcting higher after
yesterday’s big drop. The sellers might want to split their position in half as
we have two good entry points:</p><ul><li>The first one around the broken trendline
where we can find the 38.2% <a href="https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/">Fibonacci
retracement</a> level and the 4-hour 8 moving average for
confluence.</li><li>The second one around the downward
trendline where we can find the 61.8% Fibonacci retracement level and the
4-hour 21 moving average for <a href="https://www.forexlive.com/Education/technical-analysis-confluence-20220318/">confluence</a>. </li></ul><p>The buyers, on the other hand, will likely
increase their bullish bets at every break higher targeting the 1.29 handle. </p><p>Upcoming Events</p><p><a href="https://www.forexlive.com/EconomicCalendar">This week</a> is full of key economic data which will
culminate with the NFP report on Friday. We begin today with the US ISM
Manufacturing PMI and Job Openings and given the recent trends there could be
room for disappointment. Later in the day, we will get the release of the FOMC
Minutes, but it’s not expected to be market-moving given that it’s three weeks
old data. Tomorrow, we will have another slate of US labour market data with
the release of the US ADP and Jobless Claims figures. Finally, on Friday, we
conclude the week with the NFP report and the ISM Services PMI. </p>

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