Daily Outlook for GBP/USD with fundamentals, intermarket, sentiment, and technicals. Fundamentals: The UK announced that virtually all covid restrictions will be lifted by July 19, despite a rise in new daily cases (currently around 30k). However, hospitalization rates are expected to be lower than in previous waves as almost 90% of the UK population has developed covid antibodies. In the US, the CPI report is the highlight of today, expected 0.5% m/m vs 0.6% m/m in May. The USD got bid ahead of the release. Higher-than-expected numbers could lead to further USD strength. There are no reports of note coming from the UK today. Tuesday at 12:30: USD CPI m/m (Expected: 0.5%, Previous: 0.6%)
Tuesday at 12:30: USD Core CPI m/m (Expected: 0.4%, Previous: 0.7%)
Tuesday at 17:01: USD 30-y Bond Auction (Expected: , Previous: 2.17|2.3) Intermarket: Yield differentials have moved sharply lower in favor of the USD, although yields remain slightly supportive for the pair. Sentiment: The GBP is one of the rare currencies that has seen an influx of long positions, according to the CoT . Risk sentiment remains somewhat mixed today with Asian markets higher, and European markets trading around their opening levels. Technicals: The pair retraced off two-week highs this morning (1.3910 resistance), with selling occurring on increased volume and with steady ranges ( bearish ). To the downside, the 1.3830 level is an important support (50% Fib and July 07 high), followed by the 1.3810 level (61.8% Fib, liquidity). Today’s demand for USD could prove to be a “buy the rumor, sell the fact” once the CPI report gets released, posing a risk for an upside reversal in the pair.