GBPUSD – Buckle Up for a Busy 48 Hours of Event Risk!British Pound vs US DollarPEPPERSTONE:GBPUSDPepperstoneWhile the details of a plan to reopen the Strait of Hormuz on Friday are finalised, the attention of FX traders may shift to other market drivers. Amongst the major currency pairs, GBPUSD perhaps has the most event risk attached to it, with key UK economic data, a Federal Reserve and Bank of England interest rate decision and a crucial UK local election to consider, all in the space of 48 hours. Throughout June so far, GBPUSD has been rangebound, trading between a high of 1.3483 from June 5th and a low of 1.3306 from June 8th. It could be possible that things are about to change and traders may need to prepare for a more volatile period ahead. The power 48-hour event risk window starts at 0700 BST on Wednesday with the latest UK CPI reading. Inflation in the UK is expected to have risen again, driven higher by energy prices, so any surprise prints, above or below what the market anticipates, could impact on the direction of GBPUSD as traders prepare for the Federal Reserve (Fed) interest rate decision later in the day at 1900 BST. No change to US rates is widely expected, shifting the focus for FX traders to the comments made by new Fed Chair Kevin Warsh at his first press conference in charge. With US economic data resilient and inflation in May rising at its fastest pace for 3 years, his comments on future rate moves could send a fresh jolt of volatility through GBPUSD moving into Thursday morning. Thursday’s attention shifts back to the UK and the GBP side of the currency pair. The initial focus is a local election in the town of Makerfield on the outskirts of Manchester. Andy Burnham, the current Mayor of Greater Manchester is standing for Labour. A win could see him make a swift challenge to current UK PM Kier Starmer’s leadership of the country, and given that Andy Burnham is seen as more likely to want to spend, this result could rock UK asset markets more than the Bank of England rate decision at 1200 BST, where policymakers are expected to keep rates unchanged again to buy time to assess another month of inflation and growth readings. As you can see, preparing for GBPUSD volatility could be a wise move! Technical Update: More Balanced Themes Ahead of By-Election: When a period of sideways price activity develops in any asset, where buyers are active at the lower limits of a range and sellers at the upper extremes, it is generally viewed as a sign of balance in the market. This reflects neither side being able to dominate, resulting in choppy, sideways movement until a catalyst emerges that allows one side to gain the upper hand. As the chart above shows, GBPUSD is currently caught within such a sideways range. On the downside, buyers have been active around 1.3303/06, the May 18th and June 8th lows, while any strength has been capped by resistance at 1.3525, a level equal to the 61.8% Fibonacci retracement of the early‑May decline. A close below 1.3303 or above 1.3525 may be required to suggest a breakout is materialising and help to provide an indication of where the next directional themes may lie. Potential Resistance Levels: We have already noted that 1.3525 appears to mark the upper boundary of the current balanced range. As such, closing breaks above 1.3525 may be needed to trigger further attempts to resume upside momentum. As the chart above shows, if closing breaks above 1.3525 occur, this could open the way for further strength toward 1.3658, the May 1st high. A break above that level may act as a possible catalyst for an extension of the recovery, potentially opening the way for moves toward 1.3733, the February 4th extreme. Potential Support Levels: While the first resistance level at 1.3525 continues to cap prices on a closing basis, downside pressure could emerge. If weakness is seen, support at 1.3303/06, the lower boundary of the current range, may need to be monitored. Closing breaks below this zone could shift risks toward further downside. As the chart above shows, closing breaks below 1.3303/06 could indicate scope for deeper price declines toward 1.3160, the March 31st session low, potentially further if that level also gives way on a closing basis. The material provided here has not been prepared accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients. 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