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Uncle Sam is printing May’s consumer price numbers today!

Think the release will affect GBP/USD’s weeks-long range?

Here’s a setup that I’m looking at:

GBP/USD Trade Idea

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

As you can see, Cable is about to hit the 1.4100 major psychological handle that lines up with a range support that hasn’t been invalidated since mid-May.

The setup caught my eye because Stochastic is also hanging out in the oversold area.

Can the bulls step in at the 1.4100 support for another day? There are tons of top-tier news releases that may send the majors all over the charts today.

For starters, the European Central Bank (ECB) is publishing its monetary policy decisions. Word around is that President Lagarde and her team won’t be making policy changes but keep your eyes peeled in case we see headlines or sentiments that might move related European currency pairs like EUR/GBP.

And then there’s the U.S. CPI report. My buddy Forex Gump – whose cat looks adorable on Zoom meetings – told me that analysts see inflation slowing down from April’s numbers even as the leading indicators point to continued price increases.

If the U.S. CPI prints hotter-than-expected numbers, then we could see dollar demand shoot up as traders price in the possibility of the Fed tapering or tightening sooner than they plan. This could cause a downside breakout that would take GBP/USD to the 1.4075 or 1.4050 previous areas of interest.

If the numbers come in as expected, though, or if Fed members step in to reassure markets that price increases are still “temporary,” then at least some traders could take the opportunity to price in business reopenings in the U.K. this month. Traders could take on riskier bets and maybe push GBP/USD back up to the 1.4150 mid-range levels.

What do you think? Will GBP/USD stay inside its range this week? Or will we see a downside breakout?

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