The dollar is up pips across the board but the party may be just beginning for the pound!
How will today’s BoE decision affect GBP/USD’s short-term range?
Before moving on to ICYMI, yesterday’s Watchlist looked at the USD/JPY short-term area of interest ahead of the US CPI report. Be sure to check if it’s still a good game!
And now for the main headlines that rocked the markets in the last trading sessions:
Headlines and recent economic data for the market:
Canadian building permits Grown 11.3% mom in March (vs 1.4% mom expected, 5.5% mom increase in February)
Headline inflation in the United States It fell slightly from 5.0% to 4.9% yoy in April, with core CPI up another 5.5% yoy
Dow Jones and Standard & Poor’s 500 The day was capped in the red as rising US inflation signaled a longer period of higher Fed interest rates
Crude oil stocks in EIA It rose by 2.95 million barrels in the week ending May 5, versus an expected 1.1 million barrels
President of the Swiss National Bank in Jordan: “Monetary policy is still not sufficiently restrictive to anchor inflation in the area of price stability.”
US budget surplus It was down 43% from a year ago in April thanks to weak revenue
RICS: A measure of new homebuyer inquiries fell from -30 to -37, the lowest level since January
consumer prices in China It rose 0.1% year-on-year in April, the lowest level since February 2021. Producer prices also fell 3.6% year-on-year, the fastest decline since May 2020.
Japanese bank lending It rose 3.2% yoy versus the 3.0% expected in April
Price action news
Asian session traders started the day pricing in a slowdown in Uncle Sam’s CPI and the possibility that the Fed will stop tightening.
Things turned to the safe haven soon enough, thanks to weaker-than-expected Chinese CPI and PPI data that indicated slowing economic activity.
The dollar has regained all of its daily losses against the major currencies and is making good progress in restoring pre-US CPI levels.
Bank of England Economic Outlook release at 11:00am GMT
BoE Governor Press at 11:30am GMT
US Producer Price Index reports at 12:30pm GMT
US Initial Jobless Claims at 12:30pm GMT
FOMC Member Christoper Waller delivers a speech at 2:15pm GMT
BusinessNZ Manufacturing Index at 10:30pm GMT
New Zealand Quarterly Inflation Expectations at 3:00 AM GMT (May 12)
Use the new Currency heat map To quickly see a visual overview of the forex market price movement! 🔥 🗺️
GBP/USD 15-minute forex Planned by TV
I don’t know if you noticed that the GBP/USD is trading within a range between 1.2670 and 1.2580.
Will the range continue for another day today?
Markets see the Bank of England (BOE) raise interest rates by another 25 basis points, then maybe hint at a couple more before pausing.
Talk of further interest rate hikes may support the GBP against the US dollar.
It looks like GBP/USD is ready to bounce from its support range after falling very little from today’s pivotal benchmark S2 (1.2560).
If the GBP bulls maintain their momentum, we could see GBP/USD retesting 1.2620 medium term levels.
However, I will not discount other GBP/USD losses.
If the BoE statement event is any guide, traders tend to sell the British pound after the BoE decision.
A bearish reaction to today’s BoE event could also drag GBP/USD to intraday lows if not S2 support area (1.2560).