GBPUSD Technical Analysis – The bearish momentum run out of steam

Fundamental
Overview

Yesterday, the USD got a
boost from a higher than expected US CPI report but gave back the gains pretty quickly.
There are two reasons for such a reaction.

The first is that at the
same time of the US CPI release we got the US Jobless Claims figures which
jumped to the top of their yearly ranges. The culprit was attributed mainly to
Hurricane Helene and the strikes.

The second reason is that
the market was already positioned for a higher than expected reading as we’ve
been seeing consistent upside in Treasury yields and the US Dollar in the days
leading up to the release. Therefore, we got kind of a “sell the fact” reaction.

On net, it was a slightly
hawkish report but it looks like the market needs some more reasons to keep
bidding the US Dollar now that the market’s pricing is back in line with the
Fed’s projections.

On the GBP side, the market
continues to expect the BoE to deliver at least one more rate cut by year-end
with a 25 bps cut in November priced at 80% probability. Next week, we will get
key data from the UK with the release of the labour market and CPI report.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD bounced near the 1.30 handle following the US CPI release. That’s
where the buyers stepped in with a defined risk below the level to position for
a rally back into the 1.3250 level. The sellers will want to see the price
breaking below the 1.30 handle to increase the bearish bets into the major trendline
next.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the bearish momentum waned as the price approached the 1.30 handle
with the lower lows getting shallower. We have now a key level at 1.3093 as it’s
the high set following the US CPI release.

The buyers will want to see
the price breaking above it to increase the bullish bets into the 1.3175 level
next. The sellers, on the other hand, will likely pile in around these levels
with a defined risk above the 1.3093 level to position for a drop into new
lows.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action. There’s not much else to add here as
the buyers will want to see the price breaking above the 1.3093 level, while
the sellers will look for a break below the 1.30 handle to extend the drop into
the major trendline. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we conclude the week with the US PPI and the University of Michigan
Consumer Sentiment survey.