GBPUSD Technical Analysis – Choppy price action amid risk-off flows

Fundamental
Overview

The USD continues to be
supported against most major currencies, especially the commodity currencies,
as the markets remain in a risk-off mood following some bad US data releases.
In fact, since last Friday, we got weak US Flash Services PMI, UMich final Consumer Sentiment and yesterday a weak US Consumer Confidence report.

The problem is that we’ve
also got inflation expectations jumping to new highs in both the UMich and the
Conference Board report. The market might be fearing that in case we get a
slowdown, the Fed might not be fast enough in cutting rates amid inflation
remaining above target and uncomfortably high long-term inflation expectations.

This is something to keep
in mind in light of the next NFP and CPI reports coming out before the March
FOMC decision where we will also get the updated SEP and Dot Plot.

On the GBP side, the data
continues to put the BoE in an uncomfortable position given the high wage
growth and sticky inflation. The market sees at least two rate cuts by the end
of the year.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD is trading right in the middle of two key levels. From a risk
management perspective, the buyers will have a better risk to reward setup
around the support zone around the 1.25 handle. The sellers, on
the other hand, will look for a break below the support to increase the bearish
bets into the 1.20 handle next.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price action is confined in a rising channel. The buyers will
likely lean on the bottom trendline to position for a rally into the
1.28 handle. The sellers, on the other hand, will look for a break lower to
pile in for a pullback into the 1.25 support.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much we can add here as the buyers will look for a bounce around the bottom
trendline, while the sellers will look for a break lower. The red lines define
the average daily range for today.

Upcoming Catalysts

Tomorrow we get the latest US Jobless Claims
figures, while on Friday we conclude the week with the US PCE data.

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