The Fed left interest rates unchanged as expected with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target. The US CPI and the US PPI beat expectations for the second consecutive month.The US Jobless Claims beat expectations across the board.The latest US Manufacturing PMI beat expectations while the Services PMI missed slightly. Both the measures remain in expansion though. The market expects the first rate cut in June.
GBPThe BoE left interest rates unchanged as expected but with Haskel and Mann this time voting for a hold instead of a hike. The employment report missed expectations with an uptick in the unemployment rate and an easing in wage growth.The UK CPI missed expectations across the board but with Services inflation remaining sticky, which continues to support the BoE’s patient stance.The latest UK PMIs showed the Services PMI missing expectations slightly and the Manufacturing PMI beating. The market expects the first rate cut in June.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD spiked back to the upper bound of the range following the Fed decision but eventually erased all the gains as the sellers piled in with a defined risk above the resistance to position for a drop back into the 1.2612 support. The buyers, on the other hand, will likely step in around the support to position for a rally back into the resistance targeting a breakout.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke through the support zone around the 1.27 handle following the more dovish change in the voting split in the BoE rate decision and the stronger US data. The pair should now reach the 1.2612 support where we will likely get some reaction as the buyers will want to buy the dip to position for a rally all the way back to the resistance. If the price were to break below the support though, we can expect the sellers to increase the bearish bets into the 1.25 handle.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that in case we get a pullback from these levels, the sellers will have a better risk to reward setup around the 1.27 handle where we can find also the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into the 1.28 resistance.
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Today we conclude the week with the UK Retail Sales data.
