December 05, 2024 at 11:03AM
Fundamental
Overview
The US Dollar continues to
consolidate around the highs as the market reached the peak in the repricing of
interest rates expectations and it will need stronger reasons to price out the
remaining rate cuts for 2025.
This was signalled by the
lack of US Dollar strength after lots of strong US data with the market’s
pricing remaining largely unchanged around three rate cuts by the end of 2025.
We might see the greenback remaining on the backfoot at least until the US CPI
due next week.
On Monday, Fed’s Waller and Fed’s Williams sounded like a rate cut in December
is basically a done deal with the plan to slow the pace of rate cuts
considerably in 2025. That’s in line with the market’s pricing.
We will likely need another
hot CPI report to force them to skip the December cut. In case the data comes
out as expected or even misses forecasts, then we can expect more USD weakness.
On the GBP side, the last UK CPI report came in higher than expected. The BoE’s
members sounded a bit less dovish recently and although BoE’s Governor Bailey expects four rate cuts by the end
of 2025, the market thinks otherwise seeing three rate cuts as the most likely
scenario for now.
GBPUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that GBPUSD eventually pulled back into the major trendline. The sellers will likely step in
here with a defined risk above the trendline to position for a drop into new
lows. The buyers, on the other hand, will want to see the price breaking higher
to increase the bullish bets into the 1.30 handle next.
GBPUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have created a range between the 1.2617 support and the 1.2750 resistance. The buyers will
look for a break higher to extend the rally into the 1.30 handle, while the
sellers will likely pile in here for a drop into the support.
GBPUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the market participants will likely continue
to play the range until we get a breakout for a more sustained move. The red
lines define the average daily range for today.
Upcoming
Catalysts
Today,
we get the latest US Jobless Claims figures, while tomorrow we conclude the
week with the US NFP report.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
