Fundamental
Overview
The USD remains on the
backfoot as the US data continues to point to resilient growth with falling
inflation. This week, we got a good US Retail Sales report suggesting that the stories
of deteriorating consumer spending have been exaggerated. Overall, this should
continue to support the soft-landing narrative and be positive for the risk
sentiment.
The GBP, on the other hand,
keeps on gaining against the US Dollar mainly because of the risk-on sentiment
as the US data continues to support at least two rate cuts from the Fed without
sending recessionary signals. Yesterday’s greenback weakness might have been
due to the drop in the USDJPY pair as flows there could have spilled over other
markets.
On the monetary policy
front, the data this week was a disappointment for the BoE as the UK CPI figures were unchanged from the prior month
and the labour market report showed wage growth remaining
at elevated levels. Therefore, the market doesn’t expect anymore a rate cut in
August.
GBPUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that GBPUSD managed to extend the rally above the 1.30 handle following the
UK CPI report and general US Dollar weakness yesterday. From a risk management
perspective, the buyers will have a better risk to reward setup around the 1.29
handle where we can also find the 38.2% Fibonacci retracement level for confluence. The sellers, on the other hand,
will want to see the price breaking below the 1.29 handle to increase the
bearish bets into the major trendline around the 1.27 handle.
GBPUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a minor trendline defining the current bullish
momentum. We can expect the buyers to keep leaning on it to position for a
continuation of the uptrend into the 1.3140 level.
The sellers, on the other
hand, will want to see the price breaking below the trendline to position for a
drop into the 1.29 support eventually targeting a break below it.
GBPUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that the price is currently pulling back into the minor trendline. If the
price fails to drop all the way back to the trendline, more aggressive buyers
might pile in on a break above the recent swing high at 1.3012. The red lines
define the average daily range for today.
Upcoming
Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude
the week with the UK Retail Sales data.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
