Fundamental
Overview
The strong bullish momentum
in the US Dollar waned a bit in this final part of the week as we got a
pullback in Treasury yields. In fact, the main culprit for the US Dollar
strength lately has been the rally in long term Treasury yields.
The yield curve has been
bear-flattening which is what you would expect with higher growth and
potentially higher inflation expectations. There’s a good argument that this
rally was a reflection of higher Trump’s winning odds.
On the GBP side, we got the
UK budget announcement yesterday which led to some choppy
price action in the British Pound. It looks like the market took it as less
contractionary than expected with the markets scaling back rate cuts
expectations for the BoE.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD seems to be bottoming out around the major trendline with the buyers stepping in for a
potential rally into the 1.32 handle. The sellers will want to see the price
breaking below the trendline to extend the drop into the 1.27 handle.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see that the price is breaking above the downward trendline that was defining
the bearish momentum on this timeframe. This might be a signal of a bigger
pullback to the upside.
The buyers will need to
break above the 1.3050 level to gain more conviction and increase the bullish
bets into the 1.32 handle next. The sellers, on the other hand, will likely
step in around the 1.3050 level to position for the break of the major trendline.
GBPUSD Technical Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see the choppy price action since yesterday with no clear direction. There’s
not much to do here other than waiting for the price to either break above the
1.3050 level or below the trendline. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we have the US PCE, the US Jobless Claims and the US Employment Cost
Index data. Tomorrow, we conclude the week with the US NFP and the US ISM
Manufacturing PMI.
