Slightly stronger than expected U.K. GDP is keeping GBP/USD afloat so far.
Can the pair hold on to its gains when the U.S. PPI report is released?
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/USD pulling back to its ascending channel support. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. June headline CPI up by 0.2% m/m vs. expected 0.3% gain and earlier 0.1% uptick, year-over-year reading down from 4.0% to 3.0% vs. 3.1% consensus
BOC hiked interest rates by 0.25% from 4.75% to 5.00% as expected, citing stubborn inflationary pressures and upgrading economic forecasts
During the presser, BOC Governor Macklem highlighted labor market tightness and willingness to keep hiking interest rates
Chinese trade surplus widened from 65.8 billion USD to 70.6 billion USD vs. 74.0 billion USD, exports up 3.7% year-over-year while imports edged 0.1% lower
U.K. monthly GDP showed that economy shrank 0.1% month-over-month in May vs. projected 0.3% contraction, earlier 0.2% growth figure
U.K. industrial production fell 0.6% month-over-month in May vs. estimated 0.4% contraction, manufacturing production down 0.2%
Price Action News
The Greenback took hits across the board when the U.S. CPI fell short of estimates, as traders likely pared expectations for interest rate hikes past July.
The dollar chalked up its steepest losses to the Aussie and Kiwi, extending the selloff when the Asian session rolled in, possibly due to slightly upbeat export data from China.
Meanwhile, the dollar kept moving sideways to the Loonie, as the BOC gave mixed messages on whether or not they plan on maintaining their pace of tightening.
Upcoming Potential Catalysts on the Forex Economic Calendar:
ECB monetary policy meeting accounts 11:30 pm GMT
U.S. headline and core PPI at 12:30 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
FOMC member Waller’s speech at 10:45 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
GBP/USD: 15-min
Cable has formed higher lows and slightly higher highs to consolidate inside an ascending wedge pattern on its short-term time frame.
The consolidation has been getting tighter, which suggests that a breakout is bound to happen soon. But which way might it go?
It could all boil down to the outcome of the U.S. PPI release, as another report reflecting subdued inflationary pressures could further dash hopes of Fed tightening for later in the year.
In that case, GBP/USD could bust through the wedge top that lines up with R1 (1.3020) and go for a rally that’s the same height as the chart pattern.
On the other hand, a break below support around the 1.3000 major psychological mark could set off a drop to the next downside barriers at S1 (1.2930) and S2 (1.2870).
Better take note of the average GBP/USD volatility of 91.3 pips when setting entries and exits for this one!
