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GBPUSD Analysis: with the upcoming BOE statement, CPI metrics, and Flash PMI results, April highs are challenged for further bull runs

Welcome to another edition of Forex Friday, a weekly report in which we highlight selected currency themes. In this week’s report, we will discuss the US dollar, euro and Aussie, and look ahead to the next week.

China’s fledgling economic recovery suffered another setback in April with activity indicators mostly disappointing, especially regarding the beleaguered property sector. The news weighed on the Chinese yuan and other Asian currencies, such as the Japanese yen and Australian dollar.

The upside in copper flagged last week has played out nicely, delivering a fresh contract high for the red metal on COMEX futures. However, the price action over the latter parts of this week has not been convincing, warning of growing near-term downside risk.

EURUSD Forecast: the pair is back up to April highs; are March highs next in sight?

Despite the slow start to today’s session, the recent price action and improving eurozone sentiment suggests the EUR/USD outlook remains positive, with the exchange rate on course to potentially head towards the 1.10 handle.

The US dollar suffered its worst day of the year and Fed fund futures now imply with near certainty that the Fed will cut by September. And that saw AUD/USD breakout in style and USD/JPY roll over, breaking below two handles on Wednesday.

it’s now up to incoming data and news flow to continue fuelling the bullish USD narrative, otherwise it risks sparking a reversal. We may be seeing the inception of such a move in EUR/USD right now.

Oil struggles after mixed China data and on Fed rate cut uncertainty. EUR/USD inches higher with Fed speakers & US CPI data in focus.

With asset managers and large speculators trimming long and short exposure to yen futures, their appetite to speculate on the currency appears to be waning after BOJ interventions.

Japan’s Nikki 225 and Hong Kong’s Hang Seng have been like chalk and cheese coming out of the pandemic. As one surged, the other floundered. But the tide looks to be turning, and fast.

The health of the consumer will be in focus next week, with US inflation data, retail sales, and the start of retailers' earnings. Walmart and Home Deport will update the market. Meanwhile, Chinese e-commerce and cloud giant Alibaba will also release earnings, along with Chinese retail sales figures later in the week,

The stronger US dollar has acted as a handbrake on commodity prices, limiting what may have been otherwise a spectacular rebound to start 2024. Imagine what may happen if the dollar were to break down?

The US dollar snapped its 3-day winning streak and formed a bearish outside day, helping gold reach our upside target. EUR/USD and AUD/USD are now eyeing a move towards key resistance levels.

WTI formed a bullish signal Wednesday after the DoE reported a drop in stockpiles, while the uptick in refinery utilization rate was welcome news ahead of the US driving season. Meanwhile, oil prices may also be closer to bottom as investors have now mostly priced out the risk of a wider conflict in the Middle East.

Oil bears have been busy over the past few weeks helping to send crude oil prices over 12% lower since the April highs. Yet recent price action suggests it could be set for a bounce.