The bullish momentum in the US Dollar appears to be dissipating as the GBPUSD pair has struggled to print a new low despite the emergence of another set of strong US economic data. Notably, the data exceeded expectations across various metrics, presenting significantly better results than anticipated. However, a notable consideration is that the market has adjusted its stance, effectively pricing out aggressive rate cut expectations. The current market outlook aligns closely with the Federal Reserve's projections.
To potentially influence the market towards pricing in an earlier pause in the Federal Reserve's easing cycle, we may require even stronger US data, particularly clear signs of an uptick in inflation. Significant upcoming risk events include the release of October data, the FOMC policy decision, and the US election, all slated for November. On the British Pound front, recent reports showed data failing to meet expectations across various fronts, spurring the market to anticipate another 25 basis-point rate cut in December. However, strong figures released this morning have provided a boost to the GBP.
Analyzing the daily chart, we observe that GBPUSD was unable to break below the crucial 1.30 handle. Despite the robust US data, GBPUSD witnessed a bounce, with buyers entering the market around these levels, positioning for a potential rally back towards the 1.3265 level. Conversely, sellers aim for evidence of a price break lower to drive an extended decline.
On the 4-hour chart, we noticed an upward price spike this morning after the release of UK retail sales data. However, the price faced rejection at a downward trendline. For buyers to make headway towards new price highs, breaking this trendline is essential, while sellers seem poised to leverage this resistance to aim for new lows.
Examining the 1-hour chart, the price exhibits a bounce around a robust support zone near the 1.3035 level, where a confluence of a previous swing level and a minor upward trendline is evident. Buyers are likely to consolidate around these levels, targeting a breakthrough above the major downward trendline, whereas sellers are keenly watching for a breach of the lower levels to bolster bearish bets, eyeing the 1.29 handle. The red line demarcates today's focal levels for the GBPUSD.
