FundamentalOverview

The USD weakened across theboard last Friday following the soft US NFPreport. The data showed some more labour market cooling with an increase in theunemployment rate and a decrease in wage growth. We basically have an economythat is slowing but still growing.

We willsee if the market will be able to keep the positive sentiment on soft landinghopes or start to worry about a recession. Yesterday, Fed Chair Powell testified to Congress but he didn't offer anything in terms of forwardguidance as they want to see more data before signalling any action.

The GBP, on the other hand,gained last week against the US Dollar mainly because of the risk-on sentimentas the US data continued to support at least two rate cuts from the Fed butdidn’t send recessionary signals. This week, we are seeing a consolidation asthe market awaits the US CPI and Jobless Claims figures tomorrow.

On the monetary policyfront, the BoEin June left the door open for a rate cut in August with the market probabilitystanding at 60%. The next UK CPI report on July 17^th will likelydecide whether the central bank will be able to deliver the first cut in Augustor wait some more time.

GBPUSDTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that GBPUSD is struggling around the 1.28 resistance as the market awaits the release ofthe US CPI and Jobless Claims figures tomorrow. This is where the sellerscontinue to step in with a defined risk above the resistance to position for adrop back into the 1.2635 support. The buyers, on the other hand, will want tosee the price breaking higher to increase the bullish bets into the 1.29 handlenext.

GBPUSD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that from a risk management perspective, the buyers will have a better riskto reward setup around the 1.2750 level where we can find the confluenceof the previous swing level and the 38.2% Fibonacciretracement level. The sellers, on the other hand, will want to see theprice breaking lower to increase the bearish bets into the 1.2635 support.

GBPUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we areseeing some pickup in bullish momentum today although the buyers will want tosee the price breaking above the most recent lower high at 1.2825 before pilingin with more conviction. On the other hand, a break below the minor counter-trendlinemight lead to an increase in the bearish momentum and provide the correctioninto the 1.2750 level. The red lines define the average daily range for today.

UpcomingCatalysts

Tomorrow will be the most important day of the week as we get the US CPI and theUS Jobless Claims figures. On Friday, we conclude the week with the US PPI andthe University of Michigan Consumer Sentiment survey.