GBPUSD TECHS: Bull Trigger Remains Exposed

Takeup of the Fed's overnight reverse repo facility Tuesday fell to its lowest since April 16th (which was depressed by a major tax payment deadline). 

• At $57.5B, down $24.7B from Monday, this is the 7th session in the last 8 that it's been below $100B. It hasn't so consistently been below that level since February.
• It comes amid continued buildup of the Treasury General Account amid bill sales, which appear to be diverting funds away from RRP.
• At least one analyst (Citi) sees ON RRP takeup dropping to near-zero by month-end.

TD Securities analysts now see the Fed's easing cycle resuming in September (vs October previously), with cuts to follow in October and December, then quarterly to 2.75-3.00%. The implied 150bp of total cuts in that outlook is unchanged from their previous view, it's just the start that has been brought forward a month.

• The impetus for the change is today's inflation report, which "could help shift the views of several Fed officials that were likely on the fence regarding the next policy move", as "the core price increase helped to allay concerns about an imminent spike in consumer prices due to tariffs". (They pencil in a 0.25% M/M core PCE rate for July).
• They write that there could be explicit communication to this effect as soon as next week: "We also now look for Chair Powell to communicate the Fed's lean toward easing in September in his Jackson Hole remarks next week. While there are still key data to be published before the next FOMC meeting, we believe the Chairman can suggest as early as next week that economic conditions are such that it supports policy re-calibration from a still modestly restrictive policy stance."

White House Press Secretary Karoline Leavitt is shortly due to deliver her first press conference since July 31. LIVESTREAM In around an hour, State Department spokesperson Tammy Bruce will brief reporters at State. LIVESTREAM 

• The White House presser is likely to be dominated by President Donald Trump's announcement yesterday that the federal government would assume temporary control of the Washington, DC police force and deploy 800 National Guard troops to tackle crime in the US capital. The federal takeover is expected to last 30 days and comes after Trump deployed 4,700 National Guard members and Marines to Los Angeles to quell protests related to White House immigration policies.
• The White House confirmed this morning that South Korean President Lee Jae Myung will meet Trump at the White House on August 25 for a first meeting between the pair since Lee took office in June. Lee’s three-day trip takes place less than a month after Seoul struck a trade framework with the US to avoid a 25% across-the-board tariff.