GBPUSD has been moving sideways on its short-term charts, finding resistance at the 1.5700 major psychological level and support at the 1.5500 mark. Price is currently moving around the middle of the range now and is finding support at the moving averages.
The 100 SMA is above the 200 SMA, suggesting that another move back to the top of the range might be in order. However, these MAs are just crossing back and forth, confirming that the consolidation is likely to carry on. Stochastic is already indicating oversold conditions, which could allow a bounce to take place, but RSI is on middle ground and barely offering good clues at the moment.
GBPUSD Fundamental Factors
The main event risk for this setup today is the UK inflation release during the London trading session. Another flat reading is expected for the headline CPI while the core figure could post a 0.8% annualized increase. Other underlying inflation reports such as the PPI, HPI, and RPI are also due today.
Data from the US was weaker than expected yesterday, with the Empire State manufacturing index posting a surprise tumble to negative territory. This indicates industry contraction, which might then weigh on employment and production later on.
Tomorrow, the US will release its CPI reports and possibly show small gains as well. Stronger than expected data could keep the dollar supported, especially since traders are still expecting the Fed to hike rates in September or December this year. Weak data, on the other hand, could show that the US economy is vulnerable to potential deflation after the PBOC recently devalued the yuan to make Chinese exports more affordable.
For today, the only reports due from the US are building permits and housing starts. Mixed results are expected since the building permits are expected to drop while housing starts could post a small gain.
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