Fundamental
Overview
The USD rallied across the
board last Friday following the hot US NFP report. The market priced out all the
aggressive rate cuts expectations and it’s now finally in line with the Fed’s
projections.
The focus remains on the
economic data. The next key event to watch will be the US CPI report tomorrow.
We will likely need a hot report to see some more downside, while a big miss
could see the market price back in a more aggressive path for rate cuts.
On the GBP side, the market
continues to expect the BoE to deliver 37 bps of easing by year-end with a 25
bps cut in November priced at 85% probability. Next week, we will get key data
from the UK with the release of the labour market and CPI reports.
GBPUSD Technical
Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD is approaching the key 1.30 handle. That’s where we can expect
the buyers to step in with a defined risk below the level to position for a
rally into new highs. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into the major trendline
around the 1.29 handle.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see that the bearish momentum waned as the market is consolidating ahead of the
US CPI report tomorrow. We have a minor support
around the 1.3058 level where the price got rejected from several times these
days. The sellers will want to see the price breaking lower to target the 1.30
handle, while the buyers will likely keep piling in around these levels to
position for a pullback into the 1.3175 level.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see that the price is trading inside a tight range between the 1.3058 support
and the 1.3113 resistance. The sellers will look for a break to the downside,
while the buyers will want to see a break to the upside to position for a rally
into the 1.3175 level next. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we have the FOMC Meeting Minutes. Tomorrow, we get the US CPI report
and the US Jobless Claims figures. On Friday, we conclude with the UK GDP, the US
PPI and the University of Michigan Consumer Sentiment report.