GBPUSD | Swing & Fundamental Analysis

Finally, the market has reacted after the decisions of the FED, BOC, BOE, ECB, BOJ, CPI, NFP, breaking free from a congestion phase. Today's data highlighted the resilience and strong growth of the American labor market, with inflation still below the 2% target. The possibility of a Fed rate cut in June is on the table, but remains uncertain; I strongly doubt it will happen in March or May.

GBPUSD presents a bearish structure with an H4 candle that broke the entire structure, landing in the demand zone at the 1.262 level. Personally, I foresee a continuation to the downside, at least below 1.26, then retracing to the 50% Fibonacci level and consolidating in the reversal zone intersecting with the trendline, before continuing the downward trend towards the 1.2520 area as the final target.

This is what I am currently observing at the H4 level. In summary, it's time to celebrate because after two weeks of sideways movement, today we've seen the first signs of momentum from the market. So, get ready for a spectacular start to the week with an acceleration from traders. Greetings and happy trading to everyone from Nicola.

Comment:

The British Pound (GBP) sharply falls from the fresh weekly highs in the early New York session on Friday as the United States Bureau of Labor Statistics (BLS) has released an encouraging labor report - the Nonfarm Payrolls (NFP) for January. The gains were generated in anticipation that the Bank of England (BoE) is expected to start reducing interest rates after the Federal Reserve (Fed) and the European Central Bank (ECB) have faded away.

Recent monetary policy statements from Federal Reserve Chair Jerome Powell, European Central Bank President Christine Lagarde, and Bank of England Governor Andrew Bailey indicate that the first two were more explicit about rate cuts. The Fed has already led three rate cuts this year, and Lagarde from the ECB anticipates the central bank commencing the rate-reduction process in late summer.

Like Jerome Powell, Andrew Bailey avoided speculations on rate cuts and warned that price pressures could pick up again in the second half of this year. The BoE chose to tame high price pressures rather than face deepening recession fears. The UK economy witnessed a decline in growth of 0.1% in the third quarter of 2023, and higher interest rates are expected to continue to place barriers to economic growth.