Fundamental Overview
The USD regained some ground in the final part of last week although we haven’t got any meaningful catalyst for the move. Overall, we continue to range as the market is waiting for something new for the next sustained trend. Given that the “short US dollar” is now the most crowded trade, it will take something meaningful to lead the market to expect more rate cuts than currently priced in.
On the GBP side, we got some mixed data recently as the UK CPI surprised to the upside, while the UK employment data came out weaker than expected. The market continues to see around two rate cuts by the end of the year with a 87% chance of a 25 bps cut at the upcoming meeting in August.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD is approaching once again the key support around the 1.3368 level. This support might even be seen as the neckline of the major head and shoulders pattern. The buyers will likely step in around the support with a defined risk below it to position for a rally into a new cycle high. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 1.3140 level next.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, there’s not much we can glean from this timeframe as the price hasn’t reached the support yet. We will need to zoom in to see some more details.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor downward trendline defining the bearish momentum on this timeframe. From a risk management perspective, the sellers will have a better risk to reward setup around the trendline and the 1.3452 swing level to position for the break below the key support. The buyers, on the other hand, will look for a break higher to pile in for a rally into the 1.36 handle next. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the get US Job Openings and Consumer Confidence data. On Wednesday, we have the US ADP, the US Q2 GDP and the FOMC rate decision. On Thursday, we get the US PCE price index, the US Jobless Claims and the US Employment Cost Index. Finally, on Friday, we conclude the week with the US NFP report and the US ISM Manufacturing PMI.
