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
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
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
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.
