GBP/USD 4 hour
Repositioning looks to be the theme in global markets today.
Treasury yields are rising, which indicates worry about the Fed cutting 25 bps instead of 50 bps. However the US dollar is weakening, which indicates the opposite.
It all points to more of a position squaring trade. On top of that, today’s UK core CPI data ran at 3.6% compared to 3.5% expected. That has the market thinking the BOE will leave rates unchanged tomorrow and spark some divergence with the Fed. Pricing currently sits at 73% for now change, up from 63% before the data.
Technically, the August high of 1.3266 is now within striking distance and I’m certain it will break if the Fed delivers a dovish 50 bps cut.