Basic overview
Today's UK labor market report showed job losses and rising unemployment, although wage growth remained strong and sticky. However, the focus remains on the two UK CPI reports from before the June meeting, and this data has not changed anything for the market. The focus will now turn to the US PPI report, which will be released later in the day. There is a risk that it will be higher than expected, so we could see a stronger US dollar in the data. Overall, it seems like it will be a waiting game until the data is released.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD is having trouble breaking through the resistance zone around the 1.2570 level and staying above it. Moderate US inflation data will be needed to break through this resistance and extend the rally to the 1.27 handle. At the moment, the price trend is likely to remain mostly range-bound while awaiting the release of the US PPI and CPI.
GBPUSD Technical Analysis – 1 hour timeframe
On the hourly chart, we can see that the 1.2448 level defines a neckline and may be forming a head-and-shoulders pattern around the 1.2570-1.2600 zone. However, this pattern needs to be considered in its underlying context, as hot US inflation statistics would increase the likelihood of a break to the downside, while moderate inflation statistics would invalidate the pattern and create a new High prices may be reached. In the short term, there is some small support around the 1.2540 and 1.2505 levels.
Future catalyst
Today there will be speeches from the US PPI and Fed Chairman Jerome Powell. Tomorrow, the US CPI report and US retail sales data will be released. On Thursday, all eyes will be on the latest U.S. unemployment claims to determine whether last week's numbers are the start of a trend or just a fluke.