Is GBP/USD ready to retest April’s highs? I’m looking at Uncle Sam’s lower-tier economic releases for potential volatility today!
Before moving on, ICYMI, today’s Daily Asia-London Session Watchlist looked at EUR/AUD’s triangle situation ahead of economic releases from Australia and the Eurozone. Be sure to check that out to see if there is still a potential play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- As Biden works to fix chips shortage, Intel promises help for automakers
- UK retail sales rise but most categories decline – BRC
- Australian business conditions surge to record in March – survey
- China’s trade surges as global economy recovers from pandemic
- UK economy returns to growth despite Covid restrictions
- European shares pause near record high with eyes on U.S. inflation data
- Bitcoin hits record high of $62,575
Upcoming Potential Catalysts on the Economic Calendar:
- Eurozone ZEW economic sentiment at 9:00 am GMT
- Germany’s ZEW economic sentiment at 9:00 am GMT
- U.S. CPI report at 12:30 pm GMT
- Fed’s Bostic to give a speech at 7:15 pm GMT
What to Watch: GBP/USD
GBP/USD spent its first full April week sliding down the short-term charts. The downswing stopped at around 1.3675, though, and has since formed a potential reverse Head and Shoulders pattern.I’m hoping today’s events will give us a clearer picture. See, Uncle Sam will print its March consumer price data, and word around is that traders will look at the report for cues on the pace of global economic recovery as well as signs that the Fed would need to tighten its loose policies sooner than expected.
If inflation comes in much hotter than markets are expecting, then dollar bulls will make pips rain across the board and likely drag GBP/USD to its April lows and beyond.
But GBP bulls can give them a run for their money. Remember that the U.K. economy just showed that its growth couldn’t be tamed in February despite a slowdown in vaccinations and strict lockdown measures. Now that more U.K. businesses are opening up, traders will find it easier to prefer the pound over the other dollar counterparts.
If the U.S. CPI prints weaker-than-expected, or if traders pay more attention to buying “riskier” bets than the dollar, then GBP/USD could break above its neckline to retest the 1.3800 psychological level or April’s highs.