#GBPUSD @ 1.13205 tanked to fresh multi-year lows at around 1.1234 as a reaction to the Fed’s 75 bps rate hike. (Pivot Orderbook analysis)

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for PREMIUM VERSION HERE to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level4)]

• GBP/USD tanked to fresh multi-year lows at around 1.1234 as a reaction to the Fed’s 75 bps rate hike.
• According to the SEP, the US Federal Reserve would likely lift rates by an additional 125 bps.
• The SEP reported that growth might dip towards 0.2%, while inflation is projected to end at around 4.5 to 5.4%.

The pair currently trades last at 1.13205.

The previous day high was 1.1461 while the previous day low was 1.1357. The daily 38.2% Fib levels comes at 1.1397, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1421, expected to provide resistance.

The GBP/USD sank and refreshed 37-year lows, sliding below the 1.1300 figure, hitting a 2022 YTD low at 1.1235 after the US Federal Reserve hiked rates by 75 bps in the September meeting. According to the Summary of Economic Projections (SEP), officials opened the door for another 75 bps in November and a 25 bps interest rate increase in December. At the time of writing, the GBP/USD seesaws around the 1.1300-50 area in a volatile trading session as Fed Chair Powell speaks.

In the Q&A session, Chair Powell said that the Fed has moved into the lowest level of restriction and added that it would take some time to see the full effects of changing financial conditions. Powell said that longer-run inflation expectations remained somewhat anchored and added that supply shocks had caused part of the inflation, and if they abate, it could help ease elevated prices.

Furthermore, regarding a soft landing, he said it would be challenging, but no one knows if the current Fed tightening process would lead to a recession and how deep it would be.

According to its mandate, the US Federal Reserve decided to hike rates to the 3-3.25% range on Wednesday, bringing inflation towards its 2% target. In the monetary policy statement, the FOMC reiterated that it’s strongly committed to reaching the Fed’s goal and mentioned that further rate hikes are needed.

Fed officials acknowledged that economic indicators point to modest economic growth while spending is getting hit by higher rates. Participants mentioned that the labor market remains “robust,” and the unemployment rate has remained low.

Concerning inflation, Fed officials mentioned that inflation remains elevated due to reflecting imbalances between supply and demand.

Aside from this, the Summary of Economic Projections (SEP) policymakers expects the Federal funds rate to increase to 4.4% by the year’s end, as reported by the median. Meanwhile, as reported by the PCE, inflation is estimated to reach 5.4%, while the core PCE figure, which is the benchmark for Fed members, is estimated to end at 4.5%. The unemployment rate is calculated to uptick to 3.8%.

Notably, most inflation readings were revised upwards, alongside interest rate projections.

The GBP/USD dropped below the 1.1200 mark as the headline crossed newswires and reached a YTD low at 1.1234. However, bids entered around the year’s lows and climbed toward current price levels, jumping almost 100 pips, as the US Federal Reserve Chair Jerome Powell took the stand.

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.132 at the time of writing. Pair opened at 1.1381 and is trading with a change of -0.33 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.1574, 50 SMA 1.1852, 100 SMA @ 1.2085 and 200 SMA @ 1.2686.

The previous day high was 1.1461 while the previous day low was 1.1357. The daily 38.2% Fib levels comes at 1.1397, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1421, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.1338, 1.1296, 1.1234
• Pivot resistance is noted at 1.1442, 1.1504, 1.1546

[/s2If]
Join Our Telegram Group