• USD/JPY resilient above key support as US CPI awaited

• UK GDP to rise, but will GBP/USD extend rebound?

• Tensions in Middle East boost oil, but key resistance overhead

US CPI –>  USD/JPY

Friday’s US jobs data backed the “higher for longer” era in the monetary world, with the focus turning now to the next CPI inflation report due on Thursday at 12:30 GMT. The data are expected to indicate softer price pressures after two months of gradual rises, with the headline CPI likely to ease marginally to 3.6% y/y from 3.7% previously. The core measure is forecast to pull lower, from 4.3% y/y to 4.1% y/y, while the monthly reading might attract special attention too given August’s rebound as investors wonder whether the recent spike in oil prices and a resilient labor market could heat up inflation and therefore rate expectations.

Minutes from the Fed’s September policy meeting might be insightful on Wednesday.

In charts, USD/JPY is facing discouraging technical signals, but the latest bounce on the 20-day simple moving average is still looking promising. The bulls will have to rally above the 151.35-151.35 area to preserve buying confidence.

UK GDP –> GBP/USD

Turning to Europe, the UK’s monthly GDP data will feature on the calendar on Thursday at 06:00 GMT along with industrial production and trade figures. A big upward revision in the national Q2 GDP growth readings put the UK at the forefront compared to Germany and France last week, but the British pound could barely reap any benefits.

Hence, although the August GDP release is expected to show a slightly higher three-month average of 0.3% y/y from 0.2% previously and a monthly bounce of 0.5% compared to 0.0% in August 2022, traders might not provide a helping hand to the British pound.

The latest GBP/USD rebound may continue based on technical analysis, but there could be challenges ahead. Resistance is anticipated at 1.2235 and 1.2340, while a decisive bounce above the 1.2430-1.2500 could be a bigger achievement. Perhaps a resumption of the hawkish rhetoric within the BoE board could trigger the desired rally in the market, but for that to happen, traders would like to see a meaningful improvement in economic data.

Tensions in Middle East –> Oil

The unexpected deadly conflict between Israel and Hamas will keep energy markets under the spotlight during the week, especially if there is possible involvement of Iran. Concerns of tighter supply lifted WTI crude oil as high as $87.23 today, but the rise is still in an early stage and is looking fragile from a technical perspective.

China’s CPI inflation and trade statistics could have an impact on energy prices during Friday’s Asian session. Should the figures suggest the recent stimulus practises are working, oil prices could recoup some lost ground. A close above 89.00 and the 20-day SMA could see an extension higher.