The Sterling is setup for a breakout.

A bull flag or a breakdown? That’s the question which should be answered following the CPI data tomorrow in North American trade. Inflation metrics have been running hot as of late and CPI data has either beat or come “in line” with forecasts all of 2021. A strong CPI beat tomorrow could boost the US Dollar across the board as the market would anticipate the FOMC to start tapering bond purchases later this year. A miss, could send the USD lower (and stocks higher) conversely. A great setup, especially for a miss would be the GBPUSD as the Sterling as held up very well against recent USD strength. A move above the 1.3900 could signal a move to 1.4000 again. However, a strong number would negate the bull flag pattern and we could trade back below the 1.3700 level again on a clean break of the 1.3800 level tomorrow.