GBPUSD Technical Analysis – The price is near a key support zone

USD

• The Fed left interest rates unchanged as
  expected at the last meeting and dropped the tightening bias in the statement.
• The US CPI and
  the US PPI beat
  expectations for the second consecutive month.
• The NFP report beat
  expectations on the headline number, but the unemployment rate and the average
  hourly earnings missed notably. Moreover, the US Jobless Claims
  yesterday beat expectations across the board with a big positive revision to
  Continuing Claims.
• The latest US ISM
  Manufacturing PMI missed expectations by a big margin
  remaining in contraction with the US ISM Services
  PMI
  following suit but holding on in expansion.
• The US Retail Sales missed
  expectations across the board although the data improved from the prior month.
• The market expects the first rate cut in June.

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  removing the tightening bias but reaffirming that they will keep rates high for
  sufficiently long to return to the 2% target.
• The employment report missed expectations with an uptick
  in the unemployment rate and an easing in wage growth.
• The UK CPI missed expectations across the board but with
  Services inflation remaining sticky, which continues to support the BoE’s
  patient stance.
• The latest UK PMIs improved from the prior month with the
  Services PMI beating expectations and the Manufacturing PMI missing.
• The market expects the first rate
  cut in June.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPUSD recently
probed above the top of the range around the 1.28 handle but got smacked back
down soon after as stronger US data lifted the US Dollar across the board. The
sellers piled in around the highs to position for a drop back into the bottom
of the range around the 1.25 handle although they will need to break some key
levels along the way. The buyers, on the other hand, will likely lean on the
red 21 moving average to
position for a rally back into the highs targeting a breakout.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a
strong support zone
around the 1.27 handle where we can find the previous resistance turned support and the confluence with the
61.8% Fibonacci retracement level and
the daily 21 moving average. This is where we can expect the buyers to step in
with a defined risk below the support to position for a rally back to the
highs. The sellers, on the other hand, will want to see the price breaking
lower to invalidate the bullish setup and increase the bearish bets into the
1.25 handle.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the pair approaching the key support zone.
On an even lower timeframe you will notice that the price is diverging with
the MACD, which
is generally a sign of a weakening momentum often followed by pullbacks or
reversals. In this case, it should be another bullish confluence for the buyers
and give them even more conviction for a rally back to the highs. If we do get
a pullback from these levels, the sellers will likely lean on the trendline with a
defined risk above it to position for another drop into the lows.

Upcoming Events

Today we conclude the week with the US Industrial
Production data and the University of Michigan Consumer Sentiment survey.

This article was written by FL Contributors at www.forexlive.com.