This week, the top event of them all is scheduled for Wednesday. At 18:00 GMT, the US Federal Reserve is set to announce its Federal Funds Rate and release the FOMC Statement and Economic Projections. In general, the markets expect the US Fed to hike 0.75%. However, some market participants expect the US monetary policymakers to strengthen the USD even more, as they await a 1.00% hike.
Afterwards, at 18:30 GMT, the Chairman of the Federal Reserve Jerome Powell will host a press conference. Quite often, the press conference reverses the initial market moves that have been caused by the monetary decision. Namely, the Chairman states something, which the market interprets as either dovish or hawkish.
On Thursday, all GBP pairs will adjust to the new UK monetary policy, as at 11:00 GMT the Bank of England is set to publish its Monetary Policy Summary and set a new GBP Official Bank Rate. The central bank is expected to hike 0.50% from 1.75% up to 2.25%. The English central bank has been steadily doing 0.50% hikes. However, the GBP has continued to decline, compared to the USD.
On Friday, at 08:30 GMT the UK Flash Manufacturing and Services Purchasing Managers Indices are expected to impact the value of the GBP.
Later on, at 13:45 GMT, the US PMIs are scheduled to be release. However, in most cases the market ignores this event.
GBP/USD short-term view
In the case of a larger than expected hike, the GBP/USD is set to sharply decline. Support might be looked for in the 1.1300 mark, the weekly S1 at 1.1267 and the 1.1250 level.However, a lower than price in hike of 0.50% might result in a surge above 1.1350. Above that level, the 1.1400 mark is set to act as resistance together with the 50 and 100-hour simple moving averages. Higher above, note the 1.1440/1.1450 range.
Hourly Chart
GBP/USD daily chart's review
On the daily candle chart, the currency pair has pierced the support of the 2020 March low level at 1.1415. The event signals that new low levels could be reached. Note that the lower trend line of the 2022 channel down pattern passes the 1.1000/1.1200 range.Daily chart
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Traders are long
On Wednesday, before the FOMC release, traders were bullish, as 66% of trader open position volume on the Swiss Foreign Exchange was in long positions.
In the meantime, pending orders in a 100-base point range around the pair were 52% to buy the GBP/USD.
On Tuesday, the sentiment was 64% long and pending orders were 57% to buy.
On Wednesday, before the FOMC release, traders were bullish, as 66% of trader open position volume on the Swiss Foreign Exchange was in long positions.
In the meantime, pending orders in a 100-base point range around the pair were 52% to buy the GBP/USD.
On Tuesday, the sentiment was 64% long and pending orders were 57% to buy.