GBPUSD Technical Analysis – We are approaching a key resistance

July 5, 2024 11:34 am

Fundamental
Overview

The USD weakened across the
board following soft US Jobless Claims and ISM Services PMI reports. Overall, the data didn’t
change much in terms of interest rates expectations, but it reinforced the view
that the Fed is going to deliver at least two rate cuts by the end of the year.

The GBP, on the other hand,
has been under pressure mainly due to the US Dollar strength last week which
has been influenced more by quarter-end flows rather than something
fundamental. This week, the US Dollar is back on the defensive as the market
continues to trade the soft-landing narrative.

Moreover, we had the UK elections yesterday and as widely expected, the Labour party achieved a landslide victory. This outcome was already priced in and it didn’t impact the Pound that much.

GBPUSD
Technical Analysis – Daily Timeframe

GBPUSD Daily

On the daily chart, we can
see that GBPUSD eventually bounced from the support at 1.2635 and extended the rally following
soft US data on Wednesday. The price is now getting close to the key 1.28
resistance.

That’s where we can expect
the sellers to step in with a defined risk above the level to position for a drop
back into the 1.2634 support. The buyers, on the other hand, will want to see
the price breaking higher to increase the bullish bets into the 1.29 handle
next.

GBPUSD Technical
Analysis – 4 hour Timeframe

GBPUSD 4 hour

On the 4 hour chart, we can
see that we got a pullback recently into the 1.2740 level where the buyers piled
in to extend the rally into the 1.28 resistance. Today, a lot will depend on
the US NFP report.

If we get bad data, the
market might go into risk-off and we will likely see the sellers piling in
aggressively at every break lower. The buyers will want to see a good or benign
report which could lead to a dip-buying opportunity on a pullback into the
1.2740 level.

GBPUSD Technical Analysis – 1 hour Timeframe

GBPUSD 1 hour

On the 1 hour chart, we can
see that the price is now trading right in the middle of the two key levels, so
from a risk management perspective, there’s not much to do here. The red lines
define the average daily range for today.

Upcoming Catalysts

Today we conclude the week with the US NFP report where the data is expected
to show 190K jobs added in June and the Unemployment Rate to remain unchanged
at 4.0%.

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