Over the course of the previous week, we received valuable insights from various central bank speakers. The prevailing consensus among them is the importance of awaiting additional data to accurately assess the extent of further tightening measures. While the majority of the Federal Open Market Committee (FOMC) anticipates two additional rate hikes this year, they consistently emphasize that these decisions are contingent upon incoming data. Notably, last week's data points towards a likelihood of a rate hike. Strong housing market data, stable US Jobless Claims, and the US Services PMI surpassing expectations were key contributors to this sentiment.
Looking ahead, upcoming reports on Non-Farm Payrolls (NFP) and Consumer Price Index (CPI) will play a crucial role in shaping future decisions. Should the data continue to reflect positive trends, it is probable that the market's current anticipation of a rate increase by the Federal Reserve in July will materialize.
In contrast, the Bank of England (BoE) surprised markets with a 50 basis points rate hike last week. This decision was driven by an exceptionally strong employment report and a core inflation figure that exceeded expectations, leading the central bank to lean towards a more aggressive course of action.
Analyzing the 4-hour chart of GBPUSD, it becomes evident that the currency pair has established a potential bottom around the 1.2680 level, suggesting a shift towards more upside movement. Currently, the moving averages are still in a downward cross, indicating a bearish bias. However, if these moving averages reverse their course and cross back to the upside, it would signal a bullish momentum and likely attract additional buying pressure.
Conversely, sellers in the market would prefer to wait for the price to break below the support zone situated at 1.2650. Such a break would signify a potential shift in sentiment and prompt sellers to enter the market, with their target set around the 1.2444 support level.
In summary, based on the 4-hour chart analysis, GBPUSD appears to have found support near 1.2680, indicating a potential for further upward movement. The crossing of the moving averages to the upside would strengthen the bullish case, while sellers may seek an opportunity to enter the market if the price breaks below the support zone at 1.2650, targeting the 1.2444 support level.
Examining the 1-hour chart, we can observe that the price of GBPUSD has entered a consolidation phase, trading within a narrow range between 1.2680 and 1.2750. This consolidation suggests a period of indecision in the market. However, if the price manages to break above the upper boundary of the range, it is likely to trigger a rally. Such a break would attract momentum buyers, who may join the market, potentially pushing the price towards new highs.
From a risk management standpoint, sellers currently face limited options and may choose to wait for a break below the support zone to consider entering the market with bearish positions.
Turning to the economic calendar, this week's data releases are relatively sparse. The focus will be on the US Jobless Claims report scheduled for Thursday and the US Personal Consumption Expenditures (PCE) report on Friday. In addition to the data, market participants can anticipate further insights from various central bank members, whose speeches and statements may provide valuable information and influence market sentiment.