In the US, the Federal Reserve decided to keep interest rates unchanged at their latest meeting, in line with expectations. The Fed’s macroeconomic projections were revised higher, indicating that they still expect to raise rates by the end of the year. However, concerns about the labor market have arisen as Continuing Claims missed expectations, pointing to a potential upward trend in unemployment. On the positive side, US retail sales beat expectations, suggesting that consumer spending remains strong.
Meanwhile, in the UK, the Bank of England also chose to keep interest rates unchanged at their recent meeting. The central bank seems inclined to maintain higher interest rates for a longer period, but also remains open to further tightening if inflationary pressures persist. The UK employment report showed a slowdown in wage growth and some job losses, indicating a potential softening labor market. Additionally, UK PMIs revealed further contraction in the services sector, which accounts for a significant portion of the country’s economic activity.
From a technical analysis perspective, the GBPUSD pair continues to follow a downward trendline, indicating a bearish bias with a target of 1.1840. Buyers would need the price to break above this trendline to change the sentiment from bearish to bullish. On the 4-hour chart, a descending triangle pattern is forming, suggesting that traders should wait for a breakout or rely on the triangle’s boundaries rather than taking trades within it. Finally, upcoming events this week include key data points such as the US labor market and the Federal Open Market Committee (FOMC) decision, as well as the Bank of England (BoE) rate decision and US jobless claims data.
