Daily U.S. Session Watchlist: GBP/USD

GBP/USD has gotta be on today’s watchlist with the latest FOMC monetary policy statement just around the corner and the BOE following not too far after.

Intermarket Snapshot

Fresh Market Headlines & Economic data:

• U.S. mortgage applications fall from 33-month high
• Canadian Inflation Surges As Core Rate Hits Highest Since 2012
• UK factory orders slide in June as car output withers: CBI
• Brexit campaigner Boris Johnson advances on Britain’s top job
• Car price war and falling air fares cool UK inflation
• Left in the dark, ECB policymakers divided on stimulus options
• Italy says will respect EU budget rules but fight to change them
• Australia Leading Index points to more weak growth in second half of 2019
• New Zealand Q1 Current Account Deficit NZ$2.6 Billion
• Japan exports slide for 6th month as trade troubles knock demand, weaken outlook

Upcoming Potential Catalysts on the Forex Calendar:

• FOMC monetary policy statement at 7:00 pm GMT
• FOMC monetary policy press conference at 7:30 pm GMT
• New Zealand GDP at 11:45 pm GMT
• Bang of Japan monetary policy statement (tentative)
• ECB Economic Bulletin at 9:00 am GMT (June 20)
• U.K. retail sales at 9:30 am GMT (June 20)
• Bank of England monetary policy statement at 12:00 pm GMT (June 20)

What to Watch: GBP/USD

GBP/USD 1-Hour Forex Chart

As mentioned above, we’ve got two of most influential events for currencies this week in the form of the latest monetary policy decisions from the Federal Reserve and the Bank of England. The more highly anticipated event is the Fed’s latest decision, as the uncertainty on whether or not we’ll get a rate cut today is pretty high. The Bank of England is expected to hold policy as is for now, but with Brexit uncertainty and global trade risks still at the forefront, it’s likely the rhetoric from the BOE will dovish once again and more likely to cut rather than raise.

So, the volatility is highly likely to kick up a notch or two in the next twenty four hours, and we’ve got some levels to watch on the one hour chart of GBP/USD above for potential entry points depending on what we get from the central banks.

For the bears, the trend is currently on your side, and if the Fed holds off from a rate cut today (and/or lowers future hike probabilities), then the Fib setup above in the works is one to watch for resistance/reversal candles back to the downside. If the do cut and USD sells off, the top of the Fibs range could possibly hold in anticipation of a dovish BOE, but also depending on how dovish the Fed sounds later.

For the bulls, it would likely take a Fed rate cut and a not-so-dovish BOE later to get this pair to break the area of interest around 1.2670.  And that shouldn’t be a problem if this scenario does play out, but keep in mind that this expectation has been somewhat priced in over the last month  or so (with exception to last week’s USD bull run). So any bearish reaction may be limited or even reverse on a “buy-the-rumor, sell-the-news” scenario.

Overall, if you’re gonna trade today’s events stay focused and be nimble!