Fundamental
Overview
The bullish momentum in the
USD is starting to fade as Treasury yields continue to fall. We had two
possible catalysts yesterday.
The first one was the much
weaker than expected US NFIB Index which dropped to a 3 month low.
There wasn’t an immediate reaction in the markets on the release, but things
started to move as the American session began.
The second one was a
comment from BoC’s Macklem where he said that bigger cuts are
possible if the economy and CPI were weaker. There’s generally a groupthink
with central banks, so the market might have projected that to the Fed’s
decision next week.
The probabilities for the
Fed to cut by 50 bps at the upcoming meeting increased to 35% and a soft US CPI
report today might get us back to a 50/50 chance between 25 and 50 bps cut. For
the BoE, the market sees a 76% probability of no change at the upcoming meeting
and a total of 50 bps of easing by year-end.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD is bouncing from the key 1.3050 support where we have also the 38.2% Fibonacci retracement level for confluence. This is where we can expect the
buyers to pile in with a defined risk below the support to position for new
highs. The sellers, on the other hand, will want to see the price breaking
lower to increase the bearish bets into the trendline.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see more clearly the bounce from the key support. The buyers will want to see
the price rallying and breaking above the 1.3140 level next to increase the
bullish bets into new highs.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see that we have a minor resistance around the 1.3110 level. We should see the
bullish momentum increasing on a break above the level with the 1.3140 level as
the next target. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the US CPI report. Tomorrow, we have the US Jobless Claims
figures and the US PPI data. On Friday, we conclude the week with the
University of Michigan Consumer Sentiment report.
