10.06.202610:42 Forex Analysis & Reviews: GBP/USD – June 10th: Traders Focus on the US Inflation Report

On the hourly chart, GBP/USD advanced to the 50.0% Fibonacci retracement level of 1.3408 on Tuesday, rebounded from it, declined to 1.3355, and then reversed again in favor of the pound. As a result, the pair may return to the 1.3408 level today. Another rebound from this level would allow traders to expect a renewed decline toward the 1.3349–1.3355 support level. Consolidation above 1.3408 would increase the probability of further growth toward the next resistance level of 1.3454–1.3466.

The wave structure remains bearish, as bulls still lack sufficient positive geopolitical news to launch a full-scale advance. The latest completed upward wave failed to break the previous peak, while the latest downward wave broke below the previous low. Geopolitical developments remain highly uncertain at the moment, leaving neither bulls nor bears with a clear advantage. The bearish trend can be considered complete only after the June 5 high is surpassed.

The news background on Tuesday was weak in terms of economic events but strong from a geopolitical perspective. As I have already noted, all intraday movements were driven by geopolitical developments related to the conflict in the Middle East. As of Wednesday morning, further escalation of the conflict had been avoided, while the parties once again exchanged strikes while maintaining the ceasefire. The situation may repeat itself today, as similar developments have occurred every few days. However, with no new strikes reported so far, traders have shifted their attention to the U.S. Consumer Price Index, which will be released later today. Forecasts suggest that inflation in the United States will accelerate to 4.2% year-over-year, but traders are more concerned with the actual reading than with forecasts. The figure could come in significantly above or below expectations. A higher-than-expected reading could trigger renewed selling pressure from bears, while a weaker reading would support bulls. At present, the FOMC is not considering further monetary policy tightening, so only a substantial acceleration in inflation is likely to force the Committee to reconsider its stance.

On the 4-hour chart, GBP/USD rebounded from the 23.6% Fibonacci retracement level of 1.3327 and reversed in favor of the pound. Therefore, the pair may return to the 1.3482–1.3514 resistance level in the near term. Consolidation below 1.3327 would favor a continuation of the decline toward the 0.0% Fibonacci level at 1.3159. No emerging divergences are currently observed on any indicator.

Commitments of Traders (COT) Report:

Sentiment among the Non-commercial category became less bearish during the latest reporting week. The number of long positions held by speculators decreased by 4,291, while short positions declined by 13,471. The gap between long and short positions currently stands at approximately 53,000 versus 110,000 contracts. Bears have dominated the market in recent months, which is unsurprising given geopolitical tensions in the Middle East and the political crisis in the United Kingdom. The bears' advantage currently exceeds a two-to-one ratio.

I still do not believe in a sustained bearish trend for the pound, but in the near term everything will depend not on economic indicators, Trump's trade policy, or central bank monetary policy, but on the duration, scale, and consequences of the conflict in the Middle East. In recent weeks, the market has adjusted to expectations of a prolonged conflict, but the latest developments suggest that a ceasefire may still be reached, although it is unlikely to be quick or easy.

News Calendar for the United States and the United Kingdom:

• United States – Consumer Price Index (12:30 UTC).

The economic calendar for June 10 contains only one significant event. The impact of the economic backdrop on market sentiment may be noticeable during the second half of the day.

GBP/USD Forecast and Trading Tips:

Short positions were possible following a rebound from the 1.3408 level on the hourly chart, targeting the 1.3349–1.3355 level. That target was nearly reached yesterday. New short positions may be considered on another rebound from 1.3408 or after a close below the 1.3349–1.3355 level. Long positions may be considered today following a rebound from the 1.3349–1.3355 support level, targeting 1.3408. Alternatively, long positions may be considered after a close above 1.3408, targeting the 1.3454–1.3466 level.

Fibonacci retracement grids are drawn from 1.3158 to 1.3655 on the hourly chart and from 1.3866 to 1.3158 on the 4-hour chart.