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GBP/USD Weaker, But Underlying Bull Theme Remains Evident

GBP
  • GBP/USD holding the vast majority of the post-CPI losses, with Monday's lows of 1.2629 the next notable downside level. This keeps GBP as the poorest performing currency across G10, reflecting the retracement in yields across both STIR and Gilt markets.
  • Much of the weakness stemming from the adjustment in '24 rate expectations, with the biggest moves in STIR seen across the Sep24 / Dec24 contracts - culminating in over 5 x 25bps rate cuts being priced for the next calendar year.
  • Today's weakness refutes the previously bullish theme in GBPUSD, after key resistance and the bull trigger at 1.2733, the Nov 29 high, had been cleared. Notable support undercuts at 1.2600, the 20-day EMA. The pullback from last Friday’s high is considered corrective, but further weakness could reinforce a pullback.

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