GBP/USD Prices, Charts and Analysis:
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Most Read: GBP/USD Technical Outlook: Short-Term Range Intact
GBP/USD Fundamental Background
Cable failed to recover the ground it surrendered to the dollar yesterday as sideways price action dominated the Asian and early European sessions. His GBP/USD selling yesterday saw the pair find support at his 1.2300 level ahead of a big day on the data and macroeconomic side.
This morning saw the release of national house price data from the UK which saw price growth continue to decline. Commenting on the figures, Nationwide chief economist Robert Gardner said monthly prices fell another 0.6% in January, but annual home price growth slowed to 1.1% from December’s 2.8%, and in August He said it was 3.2% below its peak. However, despite encouraging signs that mortgage rates are normalizing, it is still too early to tell if the housing market has started to recover. Home-buying approvals continued to decline, as reported by the Bank of England, with buyers potentially tired of rising servicing costs on typical mortgages due to higher mortgage rates. warned that it would be difficult to regain momentum in the short term, with strong economic headwinds, a likely decline in real incomes and an expected weakening of the labor market as the economy contracts.
Source: Japan Architectural Institute
With what could be called the ‘Wednesday Strike’, the UK is entering its most important day of industrial action in a decade. Downing Street has warned the public that an organized strike could cause significant disruption as up to 500,000 civil servants, teachers and train drivers walk away simultaneously over jobs, salaries and conditions. .
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How to trade GBP/USD
The big event of the day will undoubtedly be the FOMC later in the day, when the Fed is expected to raise interest rates by 25bps. Unless the latest economic forecasts are released at this meeting, market participants will undoubtedly focus on Chairman Powell’s remarks at the press conference on policy statements and the way forward.
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technical outlook
With market participants hesitant to engage before the FOMC meeting, the rest of the day could see sideways price action. The daily double top pattern is still working but failed to inspire a break in the range yesterday. Fed Chairman Powell’s hawkish press conference eases test to 1.22600, the lower end of the range , and a further drop is possible. A comment on a hike pause or a dovish message could test his 1.25000 handle psychologically and potentially break high. An important week for the long-term outlook for GBPUSD.
GBP/U.S. dollar Daily Chart – 01/02/2023
Source: Trading View
IG Client Sentiment Data: Bearish
IGCS shows that retail traders are currently short GBP/USD, with 53% of traders currently holding short positions. DailyFX typically takes a contrarian view of crowd sentiment, and the fact that traders are in short supply suggests that GBP/USD may continue to rise.
Written by: Zain Vawda, Market Writer DailyFX.com
Contact and follow Zain on Twitter. @zvawda