Investor focus now shifts to inflation data, which will be a key factor for Bank of England decisions. According to Deutsche Bank estimates, core CPI is expected to accelerate to 3.74%, services inflation to 4.9%, with an overall peak near 3.9% before easing to 3.5% by year-end. Meanwhile, the BoE’s own projections rose to 2.6%.
Later this week, attention turns to the Federal Reserve. On Friday at 02:00 (GMT+2), Chair Jerome Powell will speak at Jackson Hole. Despite July PPI climbing from 2.4% to 3.3% and core PPI from 2.6% to 3.7% y/y, Powell is expected to hint at a possible rate cut in September. Still, Barclays Plc. analysts stress that hawkish rhetoric could persist longer, with only one rate cut expected this year, likely in December. Labor market weakness remains a risk: June payrolls rose by just 14K (vs. 147K expected), and May added 19K (vs. 144K). Over the past three months, job creation has averaged 35K — the lowest since the start of COVID-19. CME FedWatch Tool shows a near 85% chance of a 25bp cut at the September 16–17 meeting. Analysts warn that stronger inflation data outweighing growth concerns could trigger a correction in equities.
Support and Resistance
The pair is attempting to resume growth within a long-term uptrend. Price is near 1.3550 (Murray [6/8]); a breakout above may open the way to 1.3672 (Murray [8/8]) and 1.3794 (Murray [+2/8]). A decline below 1.3405 (Bollinger midline, 23.6% Fibonacci) would expose 1.3306 (Murray [2/8]) and 1.3184 (Murray [0/8], 38.2% Fibonacci).
Resistance: 1.3550, 1.3672, 1.3794
Support: 1.3405, 1.3306, 1.3184
Trading Scenarios
Main scenario: Buy stop above 1.3550, with targets at 1.3672 and 1.3794, stop-loss 1.3500. Horizon: 5–7 days.
Alternative scenario: Sell stop below 1.3405, with targets at 1.3306 and 1.3184, stop-loss 1.3470.
Key Levels
1.3184, 1.3306, 1.3405, 1.3550, 1.3672, 1.3794