GBPUSD Technical Analysis – The focus switches to the US PPI data

Fundamental
Overview

Today the UK
labour market report showed job losses and an uptick in the unemployment
rate, although wage growth remained sticky at high levels. The data
hasn’t changed anything for the market though as the focus remains on the
two UK CPI reports before the June meeting. The focus will now switch to the US
PPI report due later in the day. There’s a risk it could come higher than
expected so we might see some USD strength into the data. Overall, it will be a
waiting game until the data release.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily
chart, we can see that GBPUSD is finding it hard to break and stay above the resistance
zone around the 1.2570 level. We will likely need soft US inflation figures to
break through the resistance and extend the rally into the 1.27 handle. For now,
the price action is likely to remain mostly rangebound as we wait for the US
PPI and CPI reports.

GBPUSD
Technical Analysis – 1 hour Timeframe

On the 1 hour
chart, we can see that we might have formed a head
and shoulders pattern around the 1.2570-1.2600 zone with the 1.2448 level defining
the neckline. The pattern should be taken into the fundamental context though,
so if we get hot US inflation figures, then the probabilities that we break out
to the downside will increase, while soft inflation numbers might invalidate
the pattern and take us to new highs. In the short term, we have some minor
supports around the 1.2540 and 1.2505 levels.

Upcoming
Catalysts

Today we have the US PPI and Fed Chair Powell speech. Tomorrow,
we get the US CPI report and the US Retail Sales data. On Thursday, the focus
will be on the latest US Jobless Claims figures to see whether the last week’s
numbers were the start of a trend or just a fluke.

This article was written by Giuseppe Dellamotta at www.forexlive.com.