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The U.S. ADP report is up in a few hours!

Will the release highlight the Fed’s taper plans? More importantly, will the results extend the dollar’s intraweek gains against the pound?

Before moving on, ICYMI, today’s Asia-London session watchlist looked at NZD/USD’s textbook trend setup ahead of the RBNZ’s policy decision. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

ECB to zoom in on inflation expectations, wages: Lagarde

BOJ’s Kuroda says Japan’s labour practices of retaining jobs during the pandemic keep wage pressures under control

RBNZ raises rates for first time in seven years, signals more to come

Stocks slip, bond yields bounce as oil fuels inflation angst

Dollar edges up as energy surge drives inflation worries

Shortages and surging prices stunt UK construction growth: PMI

Oil and gas surge fuels inflation fears, as German factory orders tumble

Upcoming Potential Catalysts on the Economic Calendar:

Eurozone retail sales at 9:00 am GMT
U.S. ADP report at 12:15 pm GMT
FOMC member Bostic to give a speech at 1:00 pm GMT
U.S. crude oil inventories at 2:30 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: GBP/USD

GBP/USD 1-hour Forex Chart
GBP/USD 1-hour Forex Chart

A bit of risk-taking pushed GBP/USD higher after finding support at the 1.3400 zone.

But that was last week. This week, traders are back to worrying about high inflation and its impact on the major central banks’ plans to raise interest rates.

It doesn’t help GBP that the latest U.K. construction PMI report already reflected the impact of staff and supply shortage on prices and construction activity.

Meanwhile, Uncle Sam is printing the ADP report in a few hours. Markets see the report coming in at 425K in September, higher than the 374K reading in August and a bit lower than the 490K figure that traders are seeing for the big non-farm payrolls (NFP) report on Friday.

If the ADP numbers come in much better than expected, then more traders will price in a November taper for the Fed. This could push the dollar higher and drag GBP/USD back to last week’s lows.

If the release results in a risk rally, though, or if dollar bulls decide to take some profits days before the NFP release, then we could see GBP/USD revisit key inflection points close to the 1.3630 levels.