Fundamental
Overview
Yesterday, the US PPI report missed expectations by a big margin
triggering a selloff in the US Dollar as the market started to position into a
potentially soft US CPI release today.
The UK
CPI this morning missed estimates across the board as well and raised the
probabilities of a back-to-back cut in September. Most of the initial GBP
weakness though has been erased as the selloff in the greenback has been
stronger and in the bigger picture a positive risk sentiment should favour the
pound anyway.
For the Fed, the market is
split between a 25 and 50 bps cut in September and a total of 107 bps of easing
by year-end. On the BoE side, the market sees a 41% probability of a 25 bps cut
in September and a total of 47 bps of easing by year-end.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD is approaching a key resistance
zone around the 1.29 handle. That’s where we can expect the sellers to step in
with a defined risk above the level to position for a drop into the 1.26
handle. The buyers, on the other hand, will want to see the price breaking
higher to increase the bullish bets into new highs.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see that once the price broke above the downward trendline,
the bullish momentum started to increase as more buyers piled in. We now have a
minor upward trendline defining the current bullish momentum. The buyers will
likely keep on leaning on the trendline to position for new highs, while the
sellers will want to see the price breaking lower to position for a drop into
the 1.26 handle.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see that the price bounced around the trendline and the 50% Fibonacci
retracement level this morning following the drop from the UK CPI release. The
red lines define the average daily range for today.
Upcoming
Catalysts
Today we have the US CPI report. Tomorrow, we get the US Retail Sales and
Jobless Claims figures. Finally, on Friday, we conclude the week with the
University of Michigan Consumer Sentiment survey.