Event to pay attention today:
11:30 EET. GBP - Composite PMI Index
15:30 EET. USD - Consumer Price Index
GBPUSD:
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Sterling is under pressure after softer-than-expected UK inflation. The easing in price pressures has increased the likelihood of Bank of England policy loosening over the coming meetings, narrowing the yield differential in favor of the dollar. While rate expectations are partly in the price, UK releases still point to cooling household demand.
The U.S. inflation print is a potential short-term market driver. Given the high sensitivity to real rates, even a neutral U.S. report can keep the dollar supported. If actual price dynamics exceed consensus, demand for funding and risk assets may be capped, reinforcing pressure on the pound.
The UK policy and economic backdrop remains mixed: budget priorities and household spending face a slowing economy, while the external environment for exports is soft. Altogether this argues for a cautious view on sterling and supports a sell-on-rallies approach in the near term.
Trading recommendation: SELL 1.3325, SL 1.3375, TP 1.3225
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