FundamentalOverview

The USD got a short termboost recently as Trump floated reciprocal tariffs. That came after a good US NFP report where the data was mixed at best butstill pointing to strength. The jump in average hourly earnings caught the eyebut that might have been distorted by the drop in average weekly hours.

We’ve also got another jumpin inflation expectations in the University of Michigan ConsumerSentiment surveyshowing that the tariffs news is the main culprit of the recent surge inexpectations.

The focus now switched tothe US CPI report due later today where Core inflation is expected to ticklower which would be a welcome news. A lower than expected print should see theUS Dollar losing ground across the board once again, while a hot reading mightboost the greenback for the rest of the week.

On the GBP side, the BoE lastweek cut interest rates by 25 bps as expected and we got amore dovish than expected vote split with the known hawk member Mann evenvoting for a 50 bps cut.

The pound sold offinitially but then started to fade the weakness as the market focused on theword “careful” that was added in the “gradual and careful approach tothe further withdrawal of monetary policy restraint is appropriate” line.

BoE’s Bailey then doubled down on that, sayingthat it was deliberate because of the uncertainty they are facing, so thatbrushed aside the more dovish expectations for the rates path triggered by thevote split.

GBPUSDTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that GBPUSD maintains the uptrend structure with the series of higher lowsinto the key resistance zone around the 1.25 handle. That’swhere we can expect the sellers to step in with a defined risk above theresistance to position for a drop into the 1.20 handle. The buyers, on theother hand, will want to see the price breaking higher to increase the bullishbets into the 1.28 handle next.

GBPUSD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we have an upward trendline defining the bullish momentum. If we get apullback into the trendline, the buyers will likely lean on it to position for abreak above the resistance. The sellers, on the other hand, will want to seethe price breaking lower to increase the bearish bets into new lows.

GBPUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have a minor support around the 1.2420 level. This is where we canexpect the buyers to step in to position for the break above the keyresistance. The sellers, on the other hand, will look for a break lower totarget the major trendline.

From a risk managementperspective though, it would be much better to wait for the US CPI report asany technical setup can be invalidated in a blink of an eye when the data getsreleased. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the US CPI report. Tomorrow,we get the UK GDP, the US PPI and the latest US Jobless Claims figures. OnFriday, we conclude the week with the US Retail Sales data.