The Federal Reserve System was a bit hawkish this week by holding interest rates steady at 5.00-5.25 but raising their projected terminal rate by 50 basis points in the Dot Plot. The FOMC decided to pause this meeting to gather more economic data before deciding on a possible interest rate hike in July. Their caution may be justified by weaker details recently NFP message, ISM Services PMI message a CPI report, however, showed sticky and high core inflation.

Fed Chairman Powell mentioned during the press conference that the July meeting is “live” but did not want to commit in advance. When the Dot Plot was released, the market initially reacted with a quick bid in the US dollar, but once Powell’s press conference began, it returned to its original levels. Overall, it suggests that Federal Reserve System

Federal Reserve System

The Federal Reserve System, more commonly known as the Fed, is the central banking system of the United States. Like other central banks around the world, the Fed is responsible for monetary policy, in this case the US. The Fed is one of the most watched and watched entities by forex traders, due to its material impact on the US dollar. Originally established in 1913, the Fed was created to perform a wide variety of functions. This includes stabilizing and maintaining a flexible monetary policy in

The Federal Reserve System, more commonly known as the Fed, is the central banking system of the United States. Like other central banks around the world, the Fed is responsible for monetary policy, in this case the US. The Fed is one of the most watched and watched entities by forex traders, due to its material impact on the US dollar. Originally established in 1913, the Fed was created to perform a wide variety of functions. This includes stabilizing and maintaining a flexible monetary policy in
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is ready to take further measures to control inflation, but their decisions will depend on incoming economic data. Yesterday the US count Unemployment claims again significantly missed expectations, which could be another indication of a weakening labor market.

The BoE is on track to continue raising interest rates given the recent very hot weather employment report which showed an alarmingly rapid increase in wage growth. Given the Fed pause and weaker data, this created a policy divergence between the Fed and the BoE, ultimately favoring the pound.

GBPUSD Technical Analysis – Daily Time Frame

GBPUSD daily

On the daily chart, we can see that once the GBPUSD broke out of the range, it took off thanks to the strong UK jobs report, the Fed pause and the miss in Jobless Claims. The price is now a bit overstretched as we can see in the price distance from the blue 8 moving average. Generally, we may see some consolidation or pull back into balance before the next move. For note, divergence with
MACD
is increasing every week and once we get the catalyst we could see some big moves.

GBPUSD Technical Analysis – 4 Hour Time Frame

GBPUSD 4 hours

On the 4-hour chart, we can see that there is essentially nothing that buyers or sellers can use to enter the market at these levels. In fact, from a risk management perspective, buyers should wait for a pullback of support at 1.2680, where we also find 38.2% Fibonacci retracement level and a red moving average of 21. This would be a good level to lean on and provide a better risk to reward setup. Sellers, on the other hand, should wait for a break below the line trend line before piling up and extending the fall to the 1.2444 level.

GBPUSD Technical Analysis – 1 Hour Time Frame

GBPUSD 1 hour

On the 1 hour chart, we can see that more aggressive sellers may even try to rally once the price breaks below the minor swing low at 1.2767 to target the 1.2680 support. We are likely to find strong buyers there, all else being equal.

Today, the market will pay close attention to the University of Michigan consumer sentiment report. Most recently, the market reacted strongly to this news as long-term inflation expectations saw a significant increase, from 3.0% to 3.2%. However, this figure was later revised to 3.1%. So if we see a further rise in long-term inflation expectations, the dollar is expected to rise. Conversely, if the data falls short of forecasts, the dollar is likely to fall.

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