FundamentalOverview

Last week, despite the higher-than-expectedinflation figures and a less dovish Powell, the US Dollar couldn’t extend thegains. The market’s pricing remained largely unchanged at three rate cuts bythe end of 2025.

This might be a signal thatthe market is now fine with the current pricing, and we will need strongerreasons to price out the remaining rate cuts. This could open the door for somepullbacks and general US Dollar weakness.

On the GBP side, tomorrowwe get the UK CPI report. Last time, the UK inflation data missed expectations by a bigmargin with services inflation dropping to 4.9% from 5.6% in the prior month.

In the meantime, we’ve gota soft labour market report and a lower than expected GDP print. The market is currentlypricing just a 22% probability of another 25 bps cut in December, but that willlikely increase if we were to get another miss in the CPI data.

GBPUSDTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that GBPUSD is consolidating near the major upward trendline. This is where we can expect thebuyers to step in with a defined risk below the trendline to position for arally into new highs. The sellers, on the other hand, will want to see theprice breaking lower to increase the bearish bets into new lows.

GBPUSD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that the pair looks to be bottoming out here and we might see a pullbackinto the major downward trendline. The buyers will want to see the pricebreaking above the 1.27 handle to gain more conviction, while the sellers willlikely lean on that level to target the break below the upward trendline.

GBPUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that the price action has been mostly rangebound since last Thursday asthat’s when the bullish momentum in the US Dollar stalled. There’s not much wecan add here as the buyers will look for a break above the 1.27 handle, whilethe sellers will target a break below the trendline. The red lines define the average daily range for today.

UpcomingCatalysts

Tomorrow we have the UK CPI report. On Thursday, we get the latest US JoblessClaims figures, while on Friday we conclude the week with the UK and US FlashPMIs.