On Tuesday (July 14), the British pound rose slightly against the US dollar, approaching 1.3380, influenced by a cautious and weak dollar. The market awaited US inflation data and Federal Reserve Chairman Kevin Warsh's testimony before Congress. Despite the slight pullback in the dollar, renewed tensions between the US and Iran, coupled with rising oil prices, could exacerbate inflationary pressures, leaving the overall environment still favorable for the dollar's future performance. Fundamental Analysis US Inflation Data (CPI) Expectations and Impact: Market Expectations: This CPI data shows that the overall US inflation rate fell from 4.2% to 3.8%, while core inflation is likely to remain unchanged at 2.9%. Core inflation data will be a key focus for the Federal Reserve. If the released data is higher than expected, the market will further believe that US interest rates will remain high for a long time. If the actual data exceeds expectations (especially if the core CPI is sticky), this will strengthen the Fed's rationale for maintaining high interest rates, directly boosting the dollar and putting downward pressure on the pound against the dollar. Conversely, if the data is significantly lower than expected, it may be temporarily beneficial to the pound, but geopolitical factors may limit this rebound. Federal Reserve Chairman Kevin Warsh's Congressional Testimony Federal Reserve Chairman Kevin Warsh will attend the Senate Banking Committee hearing today and tomorrow to deliver his semi-annual policy testimony. Compared to the June Federal Open Market Committee (FOMC) meeting, members of Congress will ask him more pointed and direct questions this time. Warsh has always preferred to reduce forward guidance, so this hearing will allow the market to see his views on inflation, the job market, and the interest rate outlook more clearly than usual. If he adopts a hawkish tone, it will likely boost the dollar. Warsh's first major parliamentary appearance as the new chairman is highly anticipated. Lawmakers are expected to focus on the path of inflation, the impact of geopolitical risks on the economy, and signs of cooling employment. If Warsh emphasizes that inflation risks outweigh growth risks and downplays recent employment weakness, this will reinforce market pricing in "higher and longer" interest rates, further pushing up the dollar and putting pressure on the pound. The Bank of England's Stance and Andrew Bailey's Speech The market believes that escalating tensions in the Middle East have driven oil prices up 13% this month, and the Bank of England may still need to raise interest rates this year to avoid persistently high inflation. This expectation provides some support for the pound. Bank of England Chief Economist Hugh Piller recently stated that if inflation remains stubborn, the Bank of England may further tighten monetary policy. The market will now focus on the speech by Bank of England Governor Andrew Bailey later today. If he makes dovish remarks, the market will assume the UK's interest rate hike cycle has ended, and the pound will subsequently come under downward pressure. The Bank of England is currently facing dual pressures: sticky inflation (around 3.7%) supports a hawkish stance, but weaker GDP, employment, and services PMI data limit the scope for interest rate hikes. Any dovish signals from Bailey (such as hinting at tolerating temporarily above-target inflation or emphasizing growth risks) would quickly weaken the pound's support, causing the exchange rate to accelerate its decline. The impact of UK domestic politics is also closely watched. With the Labour leadership election concluded this Friday, Andy Burnham is highly likely to be elected Labour leader and take office as Prime Minister next Monday. Investors are closely watching the Chancellor of the Exchequer chosen by the new Prime Minister. For the UK bond market and the pound, adhering to fiscal principles and maintaining market confidence is crucial. The continuity and credibility of the new government's fiscal policy will be key. If the new Chancellor of the Exchequer is perceived as favoring loose spending or deviating from fiscal discipline, UK bond yields may rise, and the pound will face additional selling pressure. Conversely, adhering to principles will provide a buffer for the pound. Technical Analysis (GBP/USD Daily Chart Source: FX168) The GBP/USD pair is currently trading below the downtrend line that began at the start of the year. The pair rebounded from the 1.3150-1.3200 support zone, but subsequently encountered resistance from both the 50-period and 200-period simple moving averages (SMAs), maintaining the overall bearish trend. The price then retreated to support around 1.3350. Short sellers are waiting for a break below this support level, after which the price will likely retest the 1.3150-1.3200 range; a further break below this range would create a new low for the current phase, further strengthening the bearish trend. On the other hand, for the bulls, buyers need to hold above the 200-period moving average around 1.3400 and break through the July high of 1.3450 to potentially reach 1.3500. This level coincides with both the downtrend line and the late May high. A successful break above this level would improve the overall technical pattern, with a subsequent upside target of 1.3650. Overall, this week's high-impact events include the US CPI, Warsh's testimony, and Bailey's speech. If US data/testimony leans hawkish while UK statements are dovish, the pound/dollar pair could be dragged down, testing support at 1.3150-1.3200. Both fundamental and technical factors suggest a slightly higher downside risk, but geopolitical factors, oil prices, and sticky UK inflation provide some support.