Euro and Pound Await New Drivers: Inflation and UK GDP in Focus

[FXOpen]

The euro and pound are showing subdued moves against the US dollar and have shifted into consolidation following their recent price action. Market participants are reluctant to establish new positions ahead of a key batch of macroeconomic data that could alter expectations for the future policy stance of the major central banks.

The next key market catalysts will be inflation data from Germany and the US. Today, Germany’s annual CPI is forecast to accelerate to 2.9% from 2.8%, which could reinforce expectations of further policy tightening by the ECB and provide support for the euro. However, tomorrow’s US inflation data will be the main event. Headline CPI is expected at 3.4% year-on-year and 0.4% month-on-month, while core CPI is forecast at 2.4% and 0.2%, respectively. Following the strong employment report, higher-than-expected inflation could strengthen expectations that the Federal Reserve will maintain a hawkish stance and support the dollar, while signs of easing price pressures could limit its upside.

For the pound, tomorrow’s UK economic data will provide an additional catalyst. UK GDP for July is forecast to show no growth after expanding by 0.3% in the previous month, despite expectations of a recovery in manufacturing output. Weaker-than-expected figures could reinforce expectations of a more dovish stance from the Bank of England and limit the recovery potential of GBP/USD.

EUR/USD​

Over recent trading sessions, EUR/USD has been consolidating within a relatively narrow range of 1.1570–1.1650. A breakout and sustained move above 1.1650 could pave the way for a retest of the August high near 1.1710. A sustained move below 1.1570 could trigger further downside towards 1.1500.

Key events for EUR/USD:

• today at 09:00 (GMT+3): Germany’s Consumer Price Index (CPI);
• today at 15:30 (GMT+3): US Producer Price Index (PPI);
• today at 15:30 (GMT+3): US initial jobless claims.

GBP/USD​

Following a retest of the 1.3470 support level on the daily chart, a Stick Sandwich pattern has formed. If the price establishes itself above 1.3500 and this level turns into support, the advance could continue towards 1.3640–1.3680. A sustained move below 1.3470, by contrast, would increase the likelihood of a deeper downside correction.

Key events for GBP/USD:

• tomorrow at 09:00 (GMT+3): UK Gross Domestic Product (GDP);
• tomorrow at 09:00 (GMT+3): UK manufacturing output;
• tomorrow at 15:30 (GMT+3): US core Consumer Price Index (CPI).

Overall, EUR/USD and GBP/USD remain in consolidation near key technical levels ahead of a new batch of macroeconomic data. For the euro, Germany’s inflation figures will provide an additional catalyst, while the pound is likely to remain sensitive to UK GDP data. However, US inflation will remain the main focus for both pairs, as it could reshape expectations for Federal Reserve policy and determine the dollar’s next direction.

 

[ArthurByte]

That 1.1570 level on EU is just screaming liquidity to me. Retailers see support, I see a pool of stops waiting to be hunted before the real expansion up. I’m staying patient for the sweep into the lower H4 FVG before looking for a long entry.

Honestly don't care about the GDP forecast for Cable either, news is just the delivery mechanism for the move. Once we clear the sell-side and tap the daily OB, it's moon mission.

Bullish as hell once these ranges get manipulated.

 

[JulianCraft]

"Moon mission"? I think you're dreaming. Inflation is still sticky as hell, and if CPI comes in hot tomorrow, the Fed is going to keep squeezing the life out of this market. There's no way they're cutting anytime soon with headline CPI stuck over 3%, and a strong dollar is going to absolutely trash EUR and GBP. I'm looking to short any bounce.

 

[Noah Vance BR]

The macro debate is interesting but I'm just looking at the numbers. Historically, front-running CPI has a negative expectancy because the slippage alone kills your R:R. I’m waiting for the range expansion. If we hit that 1.1500 mark on a spike, the probability of a mean reversion play is way higher than trying to guess if inflation is "sticky" or not. Just let the bots fight it out for the first 30 minutes.

 

[Owen Carter 27]

Honestly, forget the macro news. If you look at the daily on EU, we’re just banging our heads against a massive resistance zone that's been there since last year. I’m just waiting for a clean bearish engulfing or a pin bar at the top of the range before I even think about a position. Charts over chatter every time.

 

[LucasBennet]

Man, waiting out the first 30 mins is definitely the smartest move here. Trying to trade the initial CPI print is basically just gambling against high-frequency algos anyway. Let the dust settle and grab the real move once the direction actually confirms.