GBPUSD trades decrease following the UK CPI launch with eyes on a key help zone

Fundamental
Overview

The USD got a bit of a
boost on Monday following the better than expected US PMIs although the gains were not widespread. We’ve
also seen some bids in the greenback yesterday following the weak US Consumer Confidence where inflation expectations jumped
to yet another high.

Overall, the market is
still pricing between two to three rate cuts this year and the sentiment
remains tentative as we approach the Trump’s “Liberation Day” on April 2^nd.

On the GBP side, the UK
CPI today missed expectations almost across the board although services
inflation remains sticky around 5% which is what the BoE is more concerned
with. The market is now seeing higher chances of a rate cut at the upcoming
meeting though. We still have another inflation report before the next BoE
decision, so a rate cut is not a done deal.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD eventually pulled back into the trendline as buyers couldn’t push above
the 1.30 handle. We can expect the buyers to lean on the trendline with a
defined risk below it to position for a rally into the 1.31 handle next. The
sellers, on the other hand, will want to see the price breaking lower to pile
in for a drop into the next major trendline around the 1.27 handle.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the bullish setup around the 1.2865 level where we have the
trendline and the swing level where the bullish momentum started to wane from.
This looks like a strong support
zone where the buyers can lean onto to position for a continuation of the
uptrend. If the price were to break lower though, the sellers will likely
regain control and look for a push towards the next trendline.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a downward trendline now defining the bearish momentum on this
timeframe. If we get a pullback into it, we can expect the sellers to step in
with a defined risk above it to position for a break below the 1.2865 support
zone. The buyers, on the other hand, will look for a break higher to increase
the bullish bets into the 1.31 handle next. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we get the latest US Jobless Claims
figures, while on Friday we conclude the week with the UK Retail Sales and the US PCE report.