Fundamental Overview
The USD has been marginally weaker recently due to lower than expected US inflation figures last week that sent Treasury yields lower and made the market to price in higher chances of a second rate cut by the end of the year.
We’ve also got lots of whipsaws in the last couple of days caused by tariffs headlines. On Monday, the greenback weakened across the board following a
WSJ report saying that Trump would lay out the trade vision but won’t impose tariffs yet.
Yesterday, on the other hand, the US Dollar strengthened as Trump spoke to the media and said that
he intends to impose 25% tariffs on Canada and Mexico next week. Those gains were later erased, but Trump definitely brought more volatility.
On the GBP side, the
UK CPI report last week missed expectations across the board by a big margin and strengthened the markets expectations for a 25 bps cut at the upcoming BoE meeting. The
UK Employment report this week showed once again weakness in the labour market although wage growth remains pretty hot.
As a reminder, the
BoE kept the Bank Rate unchanged as expected at the last policy decision but we got a more dovish than expected vote split as 3 voters wanted a rate cut compared to just 1 expected. Policymakers continue to lean towards four rate cuts for this year compared to just two expected by the market.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD is testing a key
resistance zone around the 1.2350 level. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop back into the lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the major
trendline.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we now have an upward trendline defining the current bullish momentum. If the price were to pull back into it, we can expect the buyers to lean on the trendline to position for a rally into the major trendline. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as the buyers will look for a break higher to target the major trendline, while the sellers will look for a rejection to position for the pullback into the upward trendline. The red lines define the
average daily range for today.
Upcoming Catalysts
Tomorrow we get the latest US Jobless Claims figures, while on Friday we conclude the week with the Flash UK and US PMIs.
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
