GBP/USD:
Yesterday's UK inflation report came out softer than expected and increased the chances of a 0.25% interest rate hike at the upcoming Bank of England meeting, instead of the previously expected 0.50%. UK CPI fell to 7.9% from 8.7%, the core CPI dropped 6.9% from 7.1% (compared to forecasts of it remaining unchanged at 7.1%), while the UK CPI dropped to 7.9% (against a forecast of 8.2%) from 8.7% the previous month. Yesterday's trading volume was high, indicating significant closure of long positions, but not direct selling. The British pound lost 95 points yesterday.
The pair did not reach the signal level of 1.2847, and the long lower shadow indicates the possibility that buyers will continue to struggle. On the four-hour chart, the price consolidated below the MACD indicator line, and the Marlin oscillator entered downtrend territory. The short-term trend is formally bearish, but the price shows an intention to return above the MACD line (1.2965), and a sideways trend may start until the Federal Reserve announces its interest rate decision next week. This sideways movement has a potentially wide range, up to 180 points, with the upper band at 1.3034.
The pound's intention to extend its fall will be indicated by a narrow consolidation before the level of 1.2847 (the peak of June 16th) since the main bearish momentum appeared with the closure of longs on Wednesday, and now traders are eyeing short positions. Today, we expect the US to release weak economic indicators, so the dollar index may not be in top form.
