- GBP/USD attracts some buyers for the third successive day amid subdued USD demand.
- The hotter UK CPI dashed hopes for an early rate cut by the BoE and underpins the GBP.
- The intraday technical setup favours bulls and supports prospects for a further move up.
The GBP/USD pair ticks higher for the third successive day on Friday and looks to build on this week's goodish bounce from sub-1.2600 levels, or its lowest level since December 13. Spot prices currently trade just above the 1.2700 round figure, flirting with the 200-hour Simple Moving Average (SMA).
Investors trimmed their bets for an early interest rate cut by the Bank of England (BoE) after the UK Office for National Statistics (ONS) reported on Wednesday that the Consumer Price Index (CPI) rose for the first time in 10 months. This continues to underpin the British Pound (GBP), which, along with subdued US Dollar (USD) price action, acts as a tailwind for the GBP/USD pair.
That said, diminishing odds for a more aggressive policy easing by the Federal Reserve leads to a further rise in the US Treasury bond yields higher and lend some support to the Greenback. This, in turn, holds back traders from placing aggressive directional bets around the GBP/USD pair and might cap any further gains ahead of the release of the UK monthly Retail Sales figures.
From a technical perspective, the recent failure to find acceptance below the 1.2600 round-figure mark and the subsequent move-up warrants caution for bearish traders. Moreover, oscillators on daily/hourly charts are holding in the positive territory. This suggests that the path of least resistance for the GBP/USD pair is to the upside and supports prospects for additional gains.
Hence, some follow-through strength towards testing a downward sloping trend-line resistance extending from the December swing high, currently around the 1.2760-1.2765 region, looks like a distinct possibility. The said barrier should act as a key pivotal point, which if cleared decisively might set the stage for a move towards reclaiming the 1.2800 round-figure mark.
On the flip side, any meaningful slide below the 1.2700 mark now seems to find decent support near the 1.2635-1.2630 region. This is closely followed by the 1.2600 round figure, which if broken decisively will be seen as a fresh trigger for bearish traders. The GBP/USD pair might then accelerate the fall towards the 200-day SMA support, currently pegged near mid-1.2500s.
GBP/USD 1-hour chart
Technical levels to watch
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