GBP/USD snaps two day losing run after UK CPI came in higher than forecast. WTI oil slips after Chinese oil imports fall in H1. EIA data in focus.

GBP/USD rises after UK CPI beat, Powell in focus 

GBP/USD ended Tuesday firmly in the red for the second straight session as the US Dollar (UUP) was boosted by surging inflation. Today the pair is pushing higher after higher than forecast UK inflation. 

UK inflation rose 2.5% YoY in June, up from 2.1% in May. Consensus estimates pointed to 2.2% rise. This remains above the BoE’s 2% target. On a monthly basis CPI rose 0.5%, down slightly from 0.6% but ahead of 0.2% forecast prompting speculation that he BoE could tighten monetary policy sooner. 

The US Dollar is consolidating after hitting a 3-month high in the previous session. US CPI jumped 0.9% MoM, the fastest rate since 2008 and rose 5.4% YoY ahead of the tick lower to 4.9% forecast. 

Bets are rising that the Fed could move to tighten monetary policy sooner. 

Fed Chair Jerome Powell is due to testify before Congress today, investors will be watching closely for any clues over the direction of monetary policy. 

Where next for GBP/USD? 

After hitting 1.39 in the previous session, GBP/USD fell back through its 50 sma before finding support on the month old descending trendline. The price has pushed tentatively back over its 50 sma. The RSI is at 50 so neutral but pointing higher. 

Buyers will be looking for a sustained move over the 50 sma in order to look back up towards 1.39.  

Should the 50 sma support fail to hold, the price could look to test the descending trend line at 1.3790. A move below this level could see more sellers jump in and head towards 1.3740 (FXB). 

Oil  slips after disappointing Chinese import data, EIA inventories in focus

Oil is trading mildly lower after data revealed that China’s crude oil imports dropped in the first half of this year, sparking demand concerns. 

China’s crude imports declined by 3% in H1 YoY, the first contraction since 2013 amid signs that surging prices are hurting demand. 

OPEC+ still hasn’t agreed to raise output, keeping prices elevated. 

API data revealed a slightly weaker than forecast 4.079 million barrel draw, down from 7.98 million last week 

EIA crude oil supply data is due later today (OIL, BNO). 

Where next for WTI crude oil? 

WTI oil trades above its multi-week ascending trendline and above its 50 & 200 sma on the 4 hour chart keeping bulls optimistic.  

The RSI is in bullish territory, and attempting to aim higher, suggesting there could be more upside to come. 

Any move higher would need to take out 75.00 in order to head towards 76.40 the multi-year high and then on to fresh multi year highs. 

Sellers could look for a move below the 50 sma at 74.00 in order to test the ascending trendline at 7320 and the weekly low of 72.60. A breakthrough here could expose the 200 sma at 71.50.