FundamentalOverview

The USD is weaker acrossthe board following the soft US PPI report yesterday. The market pricing is nowshowing a total of 31 bps of easing by year end compared to 24 bps before thePPI. The focus remains on the US CPI report today.

A hot report will likelycause some trouble in the markets with the stock market looking as the mostvulnerable right now.The best outcome would be a softreport given the overstretched moves in the markets caused by the repricing inrate cuts expectations.

That would likely reversemost of the recent trends and trigger a correction in Treasury yields andtherefore in the US Dollar.

On the GBP side, the UK CPI report today missed expectations across theboard by a big margin and strengthened the markets expectations for a 25 bpscut at the upcoming BoE meeting.

As a reminder, the BoE kept the Bank Rate unchanged as expected atthe last policy decision but we got a more dovish than expected vote split as 3voters wanted a rate cut compared to just 1 expected.

GBPUSDTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that GBPUSD is consolidating around the low ahead of the US CPI report. Froma risk management perspective, the sellers will have a better risk to rewardsetup around the major trendline to position for further downside.The buyers, on the other hand, will want to see the price breaking higher toincrease the bullish bets into new highs.

GBPUSD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that the price broke above the minor downward trendline that was definingthe bearish momentum on this timeframe. This is generally a signal for a biggerpullback. The buyers will likely pile in around these levels to position for apullback into the major trendline. The sellers, on the other hand, will lookfor breakouts on lower timeframes to keep pushing towards new lows.

GBPUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee that we have an important resistance zone around the 1.2250 level wherethe price got rejected from several times in the past days. This is where wecan expect the sellers to step in with a defined risk above the level toposition for a drop into new lows.

The buyers, on the otherhand, will want to see the price breaking higher to increase the bullish betsinto the major trendline. The red lines define the average daily range for today although the price caneasily extend beyond those levels given that we have the US CPI report aheadand it’s a key event.

UpcomingCatalysts

Today, we have the US CPI report, while tomorrow we get the latest US JoblessClaims figures.