The dollar has gained pips across the board but the party may just be getting started for the British pound!
How will today’s BOE decision affect GBP/USD’s short-term range?
Before moving on, ICYMI, yesterday’s watchlist looked at USD/JPY’s short-term area of interest ahead of the U.S. CPI report release. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Canada’s building permits grew by 11.3% m/m in March (vs 1.4% m/m forecast, 5.5% m/m rise in February)
U.S. headline inflation inched lower from 5.0% to 4.9% y/y in April, with core CPI rising by another 5.5% y/y
Dow Jones and S&P 500 capped the day in the red as stubbornly high U.S. inflation pointed to a longer period of high-interest rates for the Fed
EIA crude oil inventory climbed by 2.95M barrels in the week ending May 5 vs. 1.1M draw expected
SNB Chairman Jordan: “Monetary policy is still not restrictive enough to anchor inflation in the area of price stability.”
U.S. budget surplus is down by 43% from a year ago in April thanks to weaker revenues
RICS: The measure of new home buyer inquiries fell from -30 to -37, the lowest since January
China’s consumer prices rose by 0.1% y/y in April, the lowest since February 2021. Producer prices also fell by 3.6% y/y, the fastest decline since May 2020
Japanese bank lending rose by 3.2% y/y vs. 3.0% expected in April
Price Action News
Overlay of USD Pairs 15-min
Asian session traders started their day by pricing in Uncle Sam’s CPI deceleration and the possibility of a tightening pause by the Fed.
Things turned around for the safe-haven soon enough, thanks to weaker-than-expected Chinese CPI and PPI data hinting at slower economic activity.
The dollar regained all of its intraday losses against its major counterparts and is making good progress on reclaiming its pre-U.S. CPI levels.
BOE statement and economic projections at 11:00 am GMT
BOE Gov. Bailey’s presser at 11:30 am GMT
U.S. PPI reports at 12:30 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
FOMC member Christoper Waller to give a speech at 2:15 pm GMT
BusinessNZ manufacturing index at 10:30 pm GMT
New Zealand’s quarterly inflation expectations at 3:00 am GMT (May 12)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
GBP/USD 15-min Forex Chart by TV
I don’t know if you’ve noticed but GBP/USD has been trading inside a range between the 1.2670 and 1.2580 levels.
Will the range hold for another day today?
Markets see the Bank of England (BOE) raising its interest rates by another 25 basis points and then maybe hint at a couple more before pausing.
Talks of more rate hikes could boost GBP against USD.
GBP/USD looks ready to bounce from its range support after dropping just shy of today’s S2 (1.2560) Standard Pivot Point.
If GBP bulls sustain their momentum, then we could see GBP/USD retest the 1.2620 mid-range levels.
I wouldn’t discount further GBP/USD losses, however.
If the BOE Statement Event Guide is any clue, traders tend to sell GBP after the BOE’s decision.
Bearish reaction to today’s BOE event could also drag GBP/USD to its intraday lows if not the S2 (1.2560) support zone.
