Namely, the US central bank was more hawkish in its policy than the Bank of England, as two members of the BoE policymaking committee voted to keep rates unchanged instead of the 0.50% rate hike. Due to these reasons the GBP/USD is heading down and looking for support.
Note that the article covers the period until the start of 2023. In the meantime, we would like to ask that feedback on the content would be provided via [email protected] email. Economic Calendar
The mid-December week will end with the publication of Markit Services and Manufacturing sector Purchasing Managers Index survey data. Note that most impact occurs due to the French and German data at 08:15 and 08:30 GMT. The European data is followed by US data at 14:45 GMT.
On December 23, look out for the US Core PCE Price Index at 13:30 GMT. This indicator is used by the US Federal Reserve as the main measure of inflation. Deviations from the forecast are bound to cause adjustments in the US Dollar's value.
During the last week of the year, there are no notable scheduled events that might impact the FX market.
GBP/USD short-term view
In the aftermath of the rate hikes, the GBP/USD declined and approached the 1.2100 mark. If the support level gets passed, note the support zones near 1.2000 and 1.1950.However, a potential recovery of the Pound against the US Dollar could encounter resistance in the 1.2200 and 1.2300 levels, before reaching the pre rate hike high levels below 1.2450.
Hourly Chart
GBP/USD daily chart's review
On the daily candle chart, the pair has breached the summer high level zone at 1.2275/1.2330. In the aftermath of the breach, the zone shortly acted as support, before being passed. In the future, it might once again act as resistance.Above the summer high level zone, take into account the April and May resistance at 1.2610/1.2660.
On the other hand, note the combined support of the 1.2000 mark and the lower trend line of a channel up pattern. In addition, the 200 and 50-day simple moving averages could provide additional support to a potential decline.
Daily chart
Read More: Technical Analysis
Traders remain short
Before the US CPI and rate hikes, traders were bearish, as 60% of trader open position volume on the Swiss Foreign Exchange was in short positions.
In the meantime, pending orders in a 100-base point range around the pair were 60% to sell the GBP/USD.
After the fundamental events, the open positons were still 60% short and orders were 66% to sell.
Before the US CPI and rate hikes, traders were bearish, as 60% of trader open position volume on the Swiss Foreign Exchange was in short positions.
In the meantime, pending orders in a 100-base point range around the pair were 60% to sell the GBP/USD.
After the fundamental events, the open positons were still 60% short and orders were 66% to sell.