Hi everyone and hope all is well.
Technical View
After a period of consolidation price eventually delivered to the upside trading into a daily order block and pricing in market inefficiency from a previous swing high. We've now traded impulsively to the downside after further interest rate hikes this week leaving behind market imbalances. We could see the possibility of price to trade back up into a 4h order block before continuing lower following current bearish market sentiment.
Fundamental Comments
FOMC Chairman Jerome Powell's hawkish remarks during the press conference provided a boost to the dollar on Wednesday and forced GBP/USD to close in negative territory. Although the Fed statement revived optimism for a less-aggressive hawkish outlook by noting that policy lags will be taken into account in determining the pace of rate hikes, Powell reaffirmed markets that they need to continue to tighten the policy.
Powell said that he expected the terminal rate to be revised higher in December's dot plot and noted that it was very premature to even think about pausing rate increases. In turn, the US Dollar Index surged higher and Wall Street's main indexes suffered heavy losses.
Today the BoE has raised its policy rate by 75 bps to 3%. The vote split will be important as investors will want to know whether some policymakers preferred a smaller move while waiting for the fiscal plan to be unveiled, but in todays case all the committee members favoured this rate hike.
BoE Governor Bailey also lead a press conference today. His remarks on the growth and inflation outlook could also impact the British pound's valuation. In case Bailey sees a deeper recession amid spending cuts and higher taxes, markets could assess this as a dovish tilt in the policy moving forward and hurt the sterling. Also, The BoE today warned that the UK could face a protracted contraction in the coming years, with high inflation and the unemployment rate climbing to 6.5% - the highest since the financial crisis.
The ISM Services PMI survey was announced in the US economic docket later in the day but GU's action is likely to be driven by the Fed's and the BoE's policy outlooks.
Hope this analysis has been useful and safe trading.
Aman | SMC Wolf FX
Technical View
After a period of consolidation price eventually delivered to the upside trading into a daily order block and pricing in market inefficiency from a previous swing high. We've now traded impulsively to the downside after further interest rate hikes this week leaving behind market imbalances. We could see the possibility of price to trade back up into a 4h order block before continuing lower following current bearish market sentiment.
Fundamental Comments
FOMC Chairman Jerome Powell's hawkish remarks during the press conference provided a boost to the dollar on Wednesday and forced GBP/USD to close in negative territory. Although the Fed statement revived optimism for a less-aggressive hawkish outlook by noting that policy lags will be taken into account in determining the pace of rate hikes, Powell reaffirmed markets that they need to continue to tighten the policy.
Powell said that he expected the terminal rate to be revised higher in December's dot plot and noted that it was very premature to even think about pausing rate increases. In turn, the US Dollar Index surged higher and Wall Street's main indexes suffered heavy losses.
Today the BoE has raised its policy rate by 75 bps to 3%. The vote split will be important as investors will want to know whether some policymakers preferred a smaller move while waiting for the fiscal plan to be unveiled, but in todays case all the committee members favoured this rate hike.
BoE Governor Bailey also lead a press conference today. His remarks on the growth and inflation outlook could also impact the British pound's valuation. In case Bailey sees a deeper recession amid spending cuts and higher taxes, markets could assess this as a dovish tilt in the policy moving forward and hurt the sterling. Also, The BoE today warned that the UK could face a protracted contraction in the coming years, with high inflation and the unemployment rate climbing to 6.5% - the highest since the financial crisis.
The ISM Services PMI survey was announced in the US economic docket later in the day but GU's action is likely to be driven by the Fed's and the BoE's policy outlooks.
Hope this analysis has been useful and safe trading.
Aman | SMC Wolf FX