GBPUSD Testing Key Level
GBPUSD is trading in the green today with the pair fighting to recover ground after heavy losses yesterday. Fears that the US is ready to join Israel’s war against Iran has sparked a fresh safe-haven bid in the US Dollar, a shift from the dynamic we’ve seen recently where USD had been trading more in line with risk assets as a result of movements in treasuries. However, GBP is seeing better demand today following the latest UK economic data this morning.
Inflation & BOE Expectations
UK inflation was seen above forecasts last month with headline annualised CPI at 3.4%, down from 3.5% prior but above the 3.3% the market was looking for. Core CPI, meanwhile, was seen in line with forecasts, at 3.5%. While down from 3.8% prior, at this level core is still well above the BOE’s forecasts. The data has caused some uncertainty in the outlook ahead of the June BOE meeting tomorrow with traders now sensing the bank will be less forthcoming on near-term rate cut chances. The market had been increasingly pricing in a cut as early as August but on the back of this data, pricing is now shifting back in favour of a September cut. If the BOE voices any concern tomorrow over stickiness in inflation, pricing could start to move further rout, creating room for a push higher in GBP accordingly.
Technical Views
GBPUSD
The rally in GBPUSD has stalled for now into the 1.3631 highs with price now retesting the 1.3427 level support. This is a key pivot for price with bulls needing to hold this level to allow for a fresh drive towards the 2022 highs around 1.3748. If we break lower, the bull trend line and 1.3264 region will be next support to note.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.