Fundamental
Overview
The USD yesterday got a
boost across the board following the US CPI report. The data was actually in line with
expectations and arguably on the softer side than feared. In fact, the market
didn’t really move much following the release but roughly an hour later we
started to see strong bids in the greenback.
This might have to do with
positioning since the “short US dollar” trade has been the most crowded one and
in such instances, it doesn’t take much to see strong unwinding. The market did
pare back further the rate cut bets with the pricing now showing 44 bps of
easing by year end compared to 47 bps before the CPI release. That could still
change today after the US PPI report.
On the GBP side, the UK CPI today came out much higher than expected across
the board. Even though we got these hotter figures, traderreduced BoE
easing bets just slightly to 50 bps by year-end compared to 53 bps before the
CPI release. In the bigger picture, the base case was two rate cuts by year-end
anyway, so even if they skip August, they will still have three meetings to
cut. Tomorrow, there’s still the UK employment report which could influence the
pricing.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD eventually erased all the gains from the dovish Fed’s Bowman
comments back in late June and pulled all the way back into the key support
around the 1.3370 level where we have also the major trendline for confluence.
This is where we can expect
the buyers to step in with a defined risk below the support to position for a
rally into a new cycle high. The sellers, on the other hand, will look for a
break lower to increase the bearish bets into the 1.3140 level next.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see more clearly the support zone around the 1.3370 level. We have now also a
minor downward trendline defining the bearish momentum. The sellers will likely
continue to lean on it to keep pushing into new lows, while the buyers will
look for a break higher to increase the bullish bets into 1.38 handle next.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, there’s
not much else we can add here as the sellers will look for a rejection from the
trendline or a break below the support, while the buyers will keep on stepping
in around the support and wait for a break above the trendline. The red lines
define the average daily range for today.
Upcoming Catalysts
Today we have the US PPI data. Tomorrow,
we get the UK employment report and the latest US Jobless Claims and Retail
Sales figures. On Friday, we conclude the week with the University of Michigan
Consumer Sentiment survey.
ForexLive.com
is evolving into
investingLive.com, a new destination for intelligent market updates and smarter
decision-making for investors and traders alike.
