S&P 500: Bull flag to new highs? Or double top and drop? BofA answers
If we look at the daily chart, we will realize that GBP/USD has broken the resistance, which is currently support at the 1.34274 area. But today the market is back in the same area, which could be an interesting momentum to look forward to.
Figure 1. GBP/USD Daily Chart – July 014, 2025
Of course, there will be many possibilities with market conditions like this. But we can see the buying and selling opportunities that might occur.
Highlight Fundamental Analysis
Tuesday, July 15, 2025 (USD CPI m/m)
The US Consumer Price Index rose 0.1% month-over-month in May 2025, easing from a 0.2% increase in April and falling short of market expectations for another 0.2% gain. Shelter and food prices each rose by 0.3%, with both components of the food index—food at home and food away from home—also posting 0.3% increases. In contrast, the energy index declined by 1.0%, driven by a drop in gasoline prices. Additional price increases were noted in medical care, motor vehicle insurance, household furnishings and operations, personal care, and education. Meanwhile, prices fell for airline fares, used cars and trucks, new vehicles, and apparel.
- Headline CPI (m/m): Expected at +0.3%, compared to +0.1% in May
- Year-over-year CPI: Forecast to rise from 2.4% to 2.7%.
- Core CPI (m/m): Projected at +0.3%, with the yearly core inflation moving from 2.9% to around 3.0%.
Implication:
- Higher-than-expected CPI (>0.3%) → USD likely to strengthen due to hawkish Fed expectations.
- Lower-than-expected CPI (<0.3%) → USD could weaken, signaling softer inflation and possible Fed easing.
Wednesday, July 16, 2025 (GBP CPI m/m)
The annual inflation rate in the UK edged down to 3.4% in May 2025 from 3.5% in April, matching expectations. The largest downward contribution came from transport prices (0.7% vs 3.3%), reflecting falls in air fares (-5%) largely due to the timing of Easter and the associated school holidays, as well as falling motor fuel prices. Additionally, the correction of an error in the Vehicle Excise Duty series contributed to the drop; the error affected April’s data, but the series has been corrected from May. Further downward pressure came from cost for housing and household services (6.9% vs 7%), mostly owner occupiers’ housing costs (6.7% vs 6.9%). Services inflation also slowed to 4.7% from 5.4%. On the other hand, the largest, upward contributions came from food and non-alcoholic beverages (4.4% vs 3.4%), namely chocolate, confectionery and ice cream, and furniture and household goods (0.8%, the most since December 2023). Compared to the previous month, the CPI rose 0.2%
- Consensus Forecast: +3.4% YoY
- Previous Reading: +3.4% (May)
Implication:
- Above 3.4% → GBP likely to strengthen, rate cuts remain off the table in the near term.
- At 3.4% → GBP stable, with BoE decision hinging on labour market/macro data.
- Below 3.4% → GBP weakens, and markets may price in BoE rate cuts around August–Q4 2025.
Technical Analysis
In the current market conditions, there will be two possibilities. That is, the market goes back up. Or the breakout continues to drop.
The current market has broken the trendline. But it would be better for us to wait for the next confirmation. Namely, the retest at the resistance area. or there is a candlestick pattern that shows sellers are dominating the market at this time.
But in this condition, there is also the possibility of a failed breakout, which will make GBP/USD resume its rise. we just need to see which momentum is valid first. although EMA50 and Stochastic show a selling opportunity.
Levels & Zones to trade USD/JPY
Support Zone
- Long-term support 1.31702 - 1.31872
- Medium-term support 1.34199 - 1.34369
Resistance Zone
- Long-term resistance 1.39478 - 1.39648
- Medium-term resistance 1.37321 - 1.37491