GBPUSD had been trading below a descending trend line since mid-June but the pair recently broke to the upside. This signals that a reversal is in order, especially since price made a pullback to the broken trend line which now seems to be holding as support.
The 100 SMA is still below the longer-term 200 SMA, which suggests that the downtrend might be able to resume. An upward crossover, however, might confirm that an uptrend is taking place.
Stochastic is moving up, reflecting a pickup in bullish pressure and a potential climb back to the previous highs or higher. RSI is on the way down, which suggests that a larger correction might still be possible.
Event risks for this trade include the release of UK CPI, with the headline figure expected to show another flat reading after printing a 0.1% uptick in May. The core version of the report could hold steady at 0.9%. Other underlying inflation figures such as the producer price index might also have an impact on GBPUSD movement.
BOE Inflation Report hearings are also scheduled today. Governor Carney could share more details on their assessment and outlook for inflation and growth, which might prompt speculations about policy changes.
Later on, the US is set to print its retail sales figures and possibly show weaker gains for both headline and core readings compared to the previous month’s results. If so, the US dollar could give back its recent gains on weaker expectations of a September Fed rate hike.
A bounce for GBPUSD could take the pair up to its recent highs near 1.5600 while a selloff could lead to a move until the 1.5400 support area or lower. Updates on the Greek debt situation could continue to push European currencies around as it still affects overall market sentiment.