GBP/USD Breaks Out Amid Waning Bets for Four Fed Rate-Hikes in 2018

FX Talking Points:

GBP/USD Extends Bullish Sequence Following Lackluster Updates to U.S. Consumer Price Index (CPI). Topside Targets on a Radar as Holding Pattern Snaps.

USD/JPY Clears Mar Opening Range Ahead of Bank of Japan (BoJ) Minutes. Relative Strength Index (RSI) Sits during Trendline Resistance.

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GBP/USD extends a new array of aloft highs lows as uninformed information prints entrance out of a U.S. economy moderate bets for 4 Fed rate-hikes in 2018, and a span might continue to retrace a decrease from progressing this year as it appears to be violation out of a near-term holding pattern.

Key developments entrance out of a U.S. might continue to change a near-term opinion for GBP/USD as marketplace courtesy turns to a Federal Open Market Committee (FOMC) seductiveness rate preference on daub for Mar 21, and the uninformed updates to a U.S. Consumer Price Index (CPI) might inspire Chairman Jerome Powell and Co. to broach a dovish rate-hike generally as a core rate of acceleration binds solid during an annualized 1.8% for a third uninterrupted month in February.

Lackluster information prints entrance out of a U.S. economy might inspire a flourishing array of Fed officials to adopt a less-hawkish tinge as ‘a integrate of members voiced regard about a opinion for inflation, saying small justification of a suggestive alleviation in a underlying trend in inflation, measures of acceleration expectations, or salary growth.’ As a result, a FOMC might have small choice though to tame expectations for a some-more assertive hiking-cycle as a executive bank still struggles to grasp a 2% aim for inflation.

With that said, topside targets are entrance behind on a radar for GBP/USD as it snaps a monthly range, and a broader change in pound-dollar function might continue to take figure in 2018 as it appears to be violation out of a wedge/triangle formation.

GBP/USD Daily Chart

GBP/USD Daily Chart

  • GBP/USD appears to be fluctuating a bullish trend carried over from late final year after unwell to break/close subsequent a 1.3690 (61.8% expansion) to 1.3700 (38.2% expansion) region, with a Relative Strength Index (RSI) reflecting a identical behavior.
  • A tighten above 1.3970 (50% expansion) raises a risk for a pierce behind towards a 1.4100 (100% expansion) handle, with a subsequent topside jump entrance in around 1.4310 (61.8% expansion) to 1.4350 (78.6% retracement), that lines adult with a 2018-high (1.4346).



USD/JPY climbs to a uninformed monthly-high (107.29) forward of a Bank of Japan (BoJ) Minutes, with a span still during risk for a some-more suggestive miscarry as a Relative Strength Index (RSI) continues to bluster a bearish arrangement carried over from late final year.

The minute comment of a BoJ’s Mar assembly might do small to derail a new allege in USD/JPY as Governor Haruhiko Kuroda Co. steadfastly validate a wait-and-see proceed for financial policy, and some-more of a same from a executive bank is coming to keep dollar-yen bid generally as a Federal Reserve is widely coming to broach a 25bp rate-hike subsequent week. However, signs of a flourishing difference within a BoJ might tame a near-term allege in a sell rate as a executive bank appears to be coming a finish of a easing-cycle.

Keep in mind, disaster to safety a monthly opening operation might fuel a allege from a 2018-low (105.25) as a span breaks out of a downward trend from progressing this year, and a Relative Strength Index (RSI) might prominence a identical energetic as a oscillator sits during trendline insurgency and is on a fork of flashing a bullish trigger.

USD/JPY Daily Chart

USD/JPY Daily Chart

  • Still watchful for a bullish RSI trigger interconnected with a tighten above a 106.70 (38.2% retracement) to 107.20 (61.8% retracement) segment to preference a incomparable allege in USD/JPY.
  • Next topside jump comes in around 108.30 (61.8% retracement) to 108.40 (100% expansion) followed by a 109.40 (50% retracement) to 110.00 (78.6% expansion) area.
  • However, miss of movement to snap a bearish RSI arrangement might furnish range-bound conditions, with a break/close subsequent 105.40 (50% retracement) bringing a downside targets behind on a radar for USD/JPY.

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— Written by David Song, Currency Analyst

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