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  • GBP/USD recovers after the upbeat UK CPI figures.
  • Last day, the US CPI weighed on the British pound.
  • Rising yields and Fed tapering may cap the gains.

The GBP/USD price forecast is neutral as the price remains in a wide range of 100 pips. The UK CPI provides some respite to the British pound. Despite no follow-up purchases, the GBP/USD pair recovered daily highs near 1.3830-35 following the release of the latest UK CPI report.

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A moderate bounce was seen on Wednesday from support marked by the lower boundary of the uptrend channel that extends from the swing lows in August. However, following the US CPI led weakness, the British pound was able to see a sharp corrective decline from 1.3910-15, the highest level since Aug 6.

Following a higher-than-expected UK CPI reading, GBP/USD gained moderately intraday. Compared to the previous month and the expected 0.5% rate, the CPI increased to 0.7% in August. Additionally, the month under review saw an increase of 3.2% from 2% in July.

Although the positive data impressed bull traders, it failed to drive significant gains in the GBP/USD, as the US dollar remained modestly strong. Investors appear confident that the Fed will commence phasing out its stimulus from the pandemic era later this year despite signs of easing inflationary pressures. Along with this, the dollar gained support due to the recovery of US Treasury yields.

Therefore, it is prudent to wait for strong follow-up buying before preparing for another move in the GBP/USD pair. After US economic releases, market participants may get some momentum in the early North American trading session, such as Empire State Manufacturing Index and Manufacturing Production figures.

GBP/USD price technical forecast: Bulls capped by 20-SMA

GBP/USD 4-hour price forecast
GBP/USD 4-hour price forecast

The GBP/USD pair has managed to break above the 50-period and 200-period SMAs on the 4-hour chart. However, the price is still under the 20-period SMA. The price may retrace a little here before further going up. The average daily range is 66% so far on the day. Hence, we have more room for the bulls on the day.

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However, the challenge for the bulls is not only to combat the 20-period SMA but to fight with bears that we can see on the two widespread down bars posted on Tuesday. Most likely, the pair may keep oscillating in the wide range of 1.3800 to 1.3900.

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