GBP/USD – H1
December's surprise rate hike by the Bank of England and expectations for another increase in the next policy meeting, have helped the pair over the past four weeks, as they counterweigh the Fed's hawkishness and accelerated tightening path.
Last week we heard from a series of Fed speakers, mostly staying on the hawkish side of the spectrum, despite Mr Powell reserved rhetoric. Commentary from Fed officials is expected to eclipse this week, since we are in the communication blackout period, ahead of the January 25-26 monetary policy meeting.
Investors will be busy though, with a large number of economic results from the UK, starting with the employment figures on Tuesday. We will be looking at the average earnings component of the report, as wage inflation has been a source of concern for the country's central bank.
Despite last week's solid performance, GBP/USD dropped on Friday and extends its losses today, breaking below its EMA100 (black line). This exposes it to the 200Day EMA (at around 1.3600), a breach of which could potentially accelerate a move towards the 1.3523-16 area.
Above the 200Day EMA, it can push back and try for new 2021 highs (1.3748), but we are cautious at this stage for such moves.
Past Performance: Past Performance is not an indicator of future results.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.