January 17, 2025 at 09:46AM
Fundamental
Overview
The USD has been unusually
resilient this week despite lots of negative catalysts. The US PPI and Core CPI came in on the softer side which saw the
market increasing the easing expectations from 24 bps before the data to 37 bps
after.
Moreover, yesterday Fed’s Waller delivered some surprisingly dovish
comments saying that a rate cut could come in the first half of this year if
the inflation data continues to show improvement and that a March cut cannot be
completely ruled out.
The market pricing
increased to 42 bps by year end as a result which is now much closer to the 50
bps projected by the Fed.
On the GBP side, the UK CPI report this week missed expectations across
the board by a big margin and strengthened the markets expectations for a 25
bps cut at the upcoming BoE meeting. Moreover, the US Retail Sales today
weighed further on the Pound as the data came in much worse than forecasts.
As a reminder, the BoE kept the Bank Rate unchanged as expected at
the last policy decision but we got a more dovish than expected vote split as 3
voters wanted a rate cut compared to just 1 expected. Policymakers continue to
lean towards four rate cuts for this year compared to three rate cuts expected
by the market.
GBPUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that GBPUSD is still consolidating around the lows despite some negative
USD news. From a risk management perspective, the sellers will have a better
risk to reward setup around the major trendline to position for further downside.
The buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into new highs.
GBPUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, there’s
not much we can glean from this timeframe as the price action remains
rangebound between two key levels, so we need to zoom in to see some more
details.
GBPUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a tight range between the 1.2160 support and 1.2250
resistance. The buyers will continue to step in around the support to position
for a rally into the major trendline, while the sellers will look for a break
lower to increase the bearish bets into new lows. The red lines define the average daily range for today.
Upcoming
Catalysts
Today, we have the US Housing Starts and Building Permits, and the US
Industrial Production and Capacity Utilization.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
