February 14, 2025 at 10:13AM
Fundamental
Overview
Yesterday, the US PPI report came in higher than expected but the
focus was on the details that feed into the Core PCE index, which is what the
Fed focuses on. Those details were all very soft and helped to bring the early
estimates down to more benign levels. In fact, the Core PCE Y/Y is now
projected to fall to 2.6% vs. 2.8% prior. That’s good news for the Fed.
The US Dollar fell across
the board as a result and eventually the bearish momentum increased
substantially in the evening as the Trump’s tariffs saga came to an end. In
fact, the US President announced his reciprocal tariffs that could go into effect in
April but the overall tone of it wasn’t aggressive and sounded a lot like the
start of a negotiating process to bring tariffs to a fair level for everyone.
On the GBP side, it’s been
all about the US Dollar softness and with the markets now less concerned about
tariffs, the other major currencies got the green light to appreciate against
the greenback. On the data side, the UK
GDP yesterday surprised to the upside which helped to brush aside some
worries on the growth side.
GBPUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that GBPUSD finally broke above the key resistance zone around the 1.25 handle. The
buyers piled in more aggressively on the breakout and will now target the 1.28
handle. The sellers, on the other hand, will want to see the price falling back
below the 1.25 zone to position for a drop into the 1.20 handle next.
GBPUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the recent breakout following the benign US PPI and the Trump’s
tariffs announcement. If we get a pullback to retest the resistance now turned
support, we can expect the buyers to step in with a defined risk below the
support to position for a rally into the 1.28 handle next. The sellers, on the
other hand, will look for a break lower to target the major trendline
around the 1.24 handle.
GBPUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum on this
timeframe. The buyers will likely lean on it to push into new highs, while the
sellers will look for a break below the trendline and the support to increase
the bearish bets into the next trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US
Retail Sales.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
