FundamentalOverview

The USD continues to besupported against most major currencies, especially the commodity currencies,as the markets remain in a risk-off mood following some bad US data releases.In fact, since last Friday, we got weak US Flash Services PMI, UMich final Consumer Sentiment and yesterday a weak US Consumer Confidence report.

The problem is that we’vealso got inflation expectations jumping to new highs in both the UMich and theConference Board report. The market might be fearing that in case we get aslowdown, the Fed might not be fast enough in cutting rates amid inflationremaining above target and uncomfortably high long-term inflation expectations.

This is something to keepin mind in light of the next NFP and CPI reports coming out before the MarchFOMC decision where we will also get the updated SEP and Dot Plot.

On the GBP side, the datacontinues to put the BoE in an uncomfortable position given the high wagegrowth and sticky inflation. The market sees at least two rate cuts by the endof the year.

GBPUSDTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that GBPUSD is trading right in the middle of two key levels. From a riskmanagement perspective, the buyers will have a better risk to reward setuparound the support zone around the 1.25 handle. The sellers, onthe other hand, will look for a break below the support to increase the bearishbets into the 1.20 handle next.

GBPUSD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that the price action is confined in a rising channel. The buyers willlikely lean on the bottom trendline to position for a rally into the1.28 handle. The sellers, on the other hand, will look for a break lower topile in for a pullback into the 1.25 support.

GBPUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, there’snot much we can add here as the buyers will look for a bounce around the bottomtrendline, while the sellers will look for a break lower. The red lines definethe average daily range for today.

Upcoming Catalysts

Tomorrow we get the latest US Jobless Claimsfigures, while on Friday we conclude the week with the US PCE data.