July 12, 2024 at 11:46AM
Fundamental
Overview
The USD weakened across the
board yesterday following another soft US CPI report and benign Jobless Claims figures. The market not only fully
priced in a rate cut in September but also started to price in some chances of
a back-to-back rate cut in November.
Overall, we had a
goldilocks data release with an economy that is slowing but still growing. This
should support the soft-landing narrative and be positive for the risk
sentiment.
The GBP, on the other hand,
keeps on gaining against the US Dollar mainly because of the risk-on sentiment
as the US data continues to support at least two rate cuts from the Fed without
sending recessionary signals.
On the monetary policy
front, the BoE in June left the door open for a rate cut in
August but BoE’s
Pill poured some cold water on those expectations. The next UK CPI report on
July 17th will likely decide whether the central bank will be able
to deliver the first cut in August or wait some more time.
GBPUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that GBPUSD managed to get past the 1.28 handle this week on some hawkish
comments from BoE’s Pill and eventually extended the rally above the 1.29
handle following the soft US CPI report. All else being equal, the target
should now be the cycle high at 1.3140.
GBPUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we now have a trendline
defining the current bullish momentum. From a risk management perspective, the
buyers will have a better risk to reward setup around the trendline to position
for a continuation of the rally into the 1.3140 level next. The sellers, on the
other hand, will want to see the price breaking below the trendline to turn the
bias more bearish and pile in for a drop back into the 1.28 handle.
GBPUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that after some consolidation around the 1.29 handle, the price restarted
going up today as the positive risk sentiment weighs on the greenback. There’s not
much to do here from a trading perspective as chasing the move at these levels doesn’t
look good. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US PPI and the University of Michigan
Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
