Fundamental Overview
Today the UK labour market report showed job losses and an uptick in the unemployment rate, although wage growth remained sticky at high levels. The data hasn’t changed anything for the market though as the focus remains on the two UK CPI reports before the June meeting. The focus will now switch to the US PPI report due later in the day. There’s a risk it could come higher than expected so we might see some USD strength into the data. Overall, it will be a waiting game until the data release.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD is finding it hard to break and stay above the resistance zone around the 1.2570 level. We will likely need soft US inflation figures to break through the resistance and extend the rally into the 1.27 handle. For now, the price action is likely to remain mostly rangebound as we wait for the US PPI and CPI reports.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we might have formed a head and shoulders pattern around the 1.2570-1.2600 zone with the 1.2448 level defining the neckline. The pattern should be taken into the fundamental context though, so if we get hot US inflation figures, then the probabilities that we break out to the downside will increase, while soft inflation numbers might invalidate the pattern and take us to new highs. In the short term, we have some minor supports around the 1.2540 and 1.2505 levels.
Upcoming Catalysts
Today we have the US PPI and Fed Chair Powell speech. Tomorrow, we get the US CPI report and the US Retail Sales data. On Thursday, the focus will be on the latest US Jobless Claims figures to see whether the last week’s numbers were the start of a trend or just a fluke.
