GILTS: Called Lower, Futures May Break Yesterday's Low

• RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg  
• RES 3: 0.6688 High Nov 7 ‘24
• RES 2: 0.6603 High Nov 11 ‘24
• RES 1: 0.6552 High June 16
• PRICE: 0.6508 @ 07:55 BST Jun 18
• SUP 1: 0.6457/6429 Low Jun 13 / 50-day EMA 
• SUP 2: 0.6357 Low May 12    
• SUP 3: 0.6275 Low Apr 14 
• SUP 4: 0.6181 Low Apr 11 

The trend set-up in AUDUSD remains bullish and the pair is holding on to the bulk of its latest gains. Key support at 0.6429, the 50-day EMA, is intact. A clear break of this EMA is required to highlight a potential short-term reversal. The pair has recently cleared a key resistance at 0.6515, the May 7 high, confirming a resumption of the uptrend. Sights are on 0.6550, a Fibonacci retracement.

GBP STIR markets are little changed in the wake of the previously detailed inflation data (firmer headline, softer services Y/Y CPI).

• Overall, we think the MPC will view this release as broadly in line with expectations, although the Committee will likely be concerned about the continued rise in food prices.
• BoE-dated OIS 0.5-1.5bp more hawkish through ’25 meetings, with 48bp of cuts showing through year-end and the next 25bp cut essentially fully discounted through the end of the September MPC.
• SONIA futures flat to +1.5.
• Our full preview of tomorrow’s BoE decision is available here.
• Expectations point towards a 7-2 vote split with both Dhingra and Taylor likely to follow up their votes for a 50bp cut in May with a vote for a sequential cut (the magnitude of which is unlikely to elicit a market reaction).
• The main focus is on whether the dataflow has been enough to convince any other members of the MPC to vote for a cut.

• The Dollar extends further lows as Europe joins the trading session, the Pound continues to extend gains, with the bid emerging following the UK Inflation Data, although the released seemed to be closer to inline Overall.
• The Dollar is more than likely playing a part, especially when looking at G10 currencies, the GBP is far from being the best performer.
• The AUD and the Kiwi are leading, up 0.54% and 0.42% respectively, Cable is only up 0.28%.
• Some report of short cover, and some recovery off the intraday lows in Equities have been supportive of the AUD and NZD, and In Terms of pure early Technical, the closest one is in the AUDUSD at 0.6552 High June 16, but this is still 38 pips away from today's 0.6514 printed high.