GBP/USD Daily Outlook: Bulls lurk in the lower 1.38xx area
Daily Outlook for GBP/USD with fundamentals, intermarket, sentiment, and technicals.
Fundamentals: The UK announced that virtually all covid restrictions will be lifted by July 19, despite a rise in new daily cases (currently around 30k). However, hospitalization rates are expected to be lower than in previous waves as almost 90% of the UK population has developed covid antibodies.
In the US, the CPI report is the highlight of today, expected 0.5% m/m vs 0.6% m/m in May. The USD got bid ahead of the release. Higher-than-expected numbers could lead to further USD strength. There are no reports of note coming from the UK today.
Tuesday at 12:30: USD CPI m/m (Expected: 0.5%, Previous: 0.6%)
Tuesday at 12:30: USD Core CPI m/m (Expected: 0.4%, Previous: 0.7%)
Tuesday at 17:01: USD 30-y Bond Auction (Expected: , Previous: 2.17|2.3)
Intermarket: Yield differentials have moved sharply lower in favor of the USD, although yields remain slightly supportive for the pair.
Sentiment: The GBP is one of the rare currencies that has seen an influx of long positions, according to the CoT. Risk sentiment remains somewhat mixed today with Asian markets higher, and European markets trading around their opening levels.
Technicals: The pair retraced off two-week highs this morning (1.3910 resistance), with selling occurring on increased volume and with steady ranges (bearish). To the downside, the 1.3830 level is an important support (50% Fib and July 07 high), followed by the 1.3810 level (61.8% Fib, liquidity).
Today's demand for USD could prove to be a "buy the rumor, sell the fact" once the CPI report gets released, posing a risk for an upside reversal in the pair.
Fundamentals: The UK announced that virtually all covid restrictions will be lifted by July 19, despite a rise in new daily cases (currently around 30k). However, hospitalization rates are expected to be lower than in previous waves as almost 90% of the UK population has developed covid antibodies.
In the US, the CPI report is the highlight of today, expected 0.5% m/m vs 0.6% m/m in May. The USD got bid ahead of the release. Higher-than-expected numbers could lead to further USD strength. There are no reports of note coming from the UK today.
Tuesday at 12:30: USD CPI m/m (Expected: 0.5%, Previous: 0.6%)
Tuesday at 12:30: USD Core CPI m/m (Expected: 0.4%, Previous: 0.7%)
Tuesday at 17:01: USD 30-y Bond Auction (Expected: , Previous: 2.17|2.3)
Intermarket: Yield differentials have moved sharply lower in favor of the USD, although yields remain slightly supportive for the pair.
Sentiment: The GBP is one of the rare currencies that has seen an influx of long positions, according to the CoT. Risk sentiment remains somewhat mixed today with Asian markets higher, and European markets trading around their opening levels.
Technicals: The pair retraced off two-week highs this morning (1.3910 resistance), with selling occurring on increased volume and with steady ranges (bearish). To the downside, the 1.3830 level is an important support (50% Fib and July 07 high), followed by the 1.3810 level (61.8% Fib, liquidity).
Today's demand for USD could prove to be a "buy the rumor, sell the fact" once the CPI report gets released, posing a risk for an upside reversal in the pair.
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