GBPUSD Technical Analysis The market takes a breather

February 18, 2025 at 09:57AM
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.

This article was written by Giuseppe Dellamotta at www.forexlive.com.