GBPUSD Technical Analysis – The market takes a breather

Fundamental Overview

The US Dollar came under pressure last week following the US PPI report as the details that feed into the Core PCE index, which is what the Fed focuses on, were all very soft. That helped to bring the early estimates down to more benign levels. In fact, the Core PCE Y/Y is now projected to fall to 2.6% vs. 2.8% in the prior month. That’s good news for the Fed.

The bearish momentum increased eventually as the Trump’s tariffs saga came to an end. In fact, the US President announced his reciprocal tariffs that could go into effect in April but the overall tone of it wasn’t aggressive and sounded a lot like the start of a negotiating process to bring tariffs to a fair level for everyone.

On the GBP side, it’s been all about the US Dollar softness and with the markets now less concerned about tariffs, the major currencies got the green light to appreciate against the greenback.

On the data side, the UK Employment report today beat expectations across the board which will keep the BoE in an uncomfortable position given the high wage growth and sticky inflation. The market pricing didn’t change much as we still have 55 bps of easing expected by year-end.

Today, we have also the US-Russia talks in Saudi Arabia and positive headlines will likely be good for the risk sentiment and weigh further on the dollar.

GBPUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that GBPUSD finally broke above the key resistance zone around the 1.25 handle. From a risk management perspective, the buyers will have a better risk to reward setup around the resistance now turned support to position for a rally into the 1.28 handle. The sellers, on the other hand, will want to see the price breaking lower to position for a drop back into he 1.21 handle next.

GBPUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have the major trendline defining the bullish momentum. If we were to get a deeper pullback into it, we can expect the buyers to lean on the trendline to position for a rally into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into new lows.

GBPUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum on this timeframe. The buyers will likely lean on it to push into new highs, while the sellers will look for a break below the trendline and the support to increase the bearish bets into the next trendline. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the US-Russia talks in Saudi Arabia. Tomorrow, we have the UK CPI report. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the UK and the US Flash PMIs.