Fundamental
Overview
Last week, despite the higher-than-expected
inflation figures and a less dovish Powell, the US Dollar couldn’t extend the
gains. The market’s pricing remained largely unchanged at three rate cuts by
the end of 2025.
This might be a signal that
the market is now fine with the current pricing, and we will need stronger
reasons to price out the remaining rate cuts. This could open the door for some
pullbacks and general US Dollar weakness.
On the GBP side, tomorrow
we get the UK CPI report. Last time, the UK inflation data missed expectations by a big
margin with services inflation dropping to 4.9% from 5.6% in the prior month.
In the meantime, we’ve got
a soft labour market report and a lower than expected GDP print. The market is currently
pricing just a 22% probability of another 25 bps cut in December, but that will
likely increase if we were to get another miss in the CPI data.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD is consolidating near the major upward trendline. This is where we can expect the
buyers to step in with a defined risk below the trendline to position for a
rally into new highs. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into new lows.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see that the pair looks to be bottoming out here and we might see a pullback
into the major downward trendline. The buyers will want to see the price
breaking above the 1.27 handle to gain more conviction, while the sellers will
likely lean on that level to target the break below the upward trendline.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see that the price action has been mostly rangebound since last Thursday as
that’s when the bullish momentum in the US Dollar stalled. There’s not much we
can add here as the buyers will look for a break above the 1.27 handle, while
the sellers will target a break below the trendline. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we have the UK CPI report. On Thursday, we get the latest US Jobless
Claims figures, while on Friday we conclude the week with the UK and US Flash
PMIs.