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  • GBP/USD lacked any firm directional bias and seesawed between tepid gains/minor losses.
  • Mostly better-than-expected UK consumer inflation figures did little to impress the GBP bulls.
  • Investors seemed reluctant to place any aggressive bets ahead of the key central bank events.

The GBP/USD pair extended its sideways consolidative price action and had a rather muted reaction to the UK consumer inflation figures.

The pair continued with its struggle to find acceptance above the 1.2900 mark and witnessed a modest intraday pullback on Wednesday, albeit lacked any follow-through and remained well within the previous day’s trading range. Growing market fears of a no-deal Brexit held the GBP bulls on the defensive and capped the GBP/USD pair’s recent recovery move from seven-week lows.

On the economic data front, better-than-expected UK consumer inflation figures extended some support to the British pound and helped limit any deeper losses. In fact, the headline CPI fell 0.4% in August as against -0.6% expected and rose 0.2% on a yearly basis. Meanwhile, core CPI decelerated to 0.9% YoY rate from 1.8% previous and beat market expectations of 0.6%.

Investors, however, seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of this week’s key central bank events. The Fed is scheduled to announce its policy decision later this Wednesday. This will be followed by the BoE monetary policy update on Thursday, which will help determine the GBP/USD pair’s near-term trajectory.

In the meantime, market participants will look forward to the release of the US Monthly Retail Sales figures for some short-term trading impetus later during the early North American session.

Technical levels to watch