Fundamental
Overview
The bullish momentum in the
US Dollar seems to be waning despite the recent higher-than-expected US CPI and PPI reports. One caveat is that the market has now
priced out the aggressive rate cuts expectations and it’s almost perfectly in
line with the Fed’s projections.
Therefore, we will likely
need more strong US data to see the market pricing in an earlier pause in the
Fed’s easing cycle and give the US Dollar a further boost. The next big risk
events will be in November when we get the October data, the FOMC policy decision
and the US election.
On the GBP side, we got the
UK
CPI report this morning and the data missed expectations across the board
by a big margin. That prompted the market to expect another 25 bps cut in
December.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD is bouncing once again from the 1.30 handle after the quick
drop following the UK CPI report. The buyers are stepping in around these
levels to position for a rally back into the 1.32 handle. The sellers, on the
other hand, will want to see the price breaking lower to increase the bearish
bets into the major trendline.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see more clearly the bounce on the 1.30 handle as the buyers continue to pile
in for a move back into the top of the recent range at 1.31. The market
participants will likely keep on playing the range until we get a breakout on
either side.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see that the price reached the bottom of the average daily range for today, so it’s unlikely that we
will see much lower prices today. It’s all about waiting for the breakout of
the range now.
Upcoming
Catalysts
Tomorrow we have the US Retail Sales and the US Jobless Claims data, while on
Friday we get the UK Retail Sales figures.