• UK CPI jumps to the highest level since 2012.
• GBP fails to capitalize on early up-move.
• US PPI eyed for trading impetus.
• FOMC/BoE holds the key.
The GBP/USD pair faded UK CPI-led uptick to 1.3380 level and retreated sharply to 2-week lows in the past hour.
The pair did get a minor boost from today's UK headline CPI print, which peaked above 3% for the first time since 2012, but failed to capitalize on the up-move amid the ongoing Brexit drama. Investors seemed convinced that Brexit uncertainty would force the BoE to go slow with monetary policy tightening and eventually prompted some fresh selling at higher levels.
However, a mildly softer tone around the US Dollar, despite a modest pickup in the US Treasury bond yields, helped limit deeper losses, with the pair quickly rebounding around 20-25 pips from session low level of 1.3310.
Investors also seemed reluctant to place aggressive bets ahead of this week's key event risks, including the highly anticipated FOMC decision on Wednesday and BoE on Thursday.
Apart from the key central bank announcements, UK labor market report and the latest US CPI print would also play a key role in determining the pair's next leg of directional move. In the meantime, today's release of US PPI figures would now be looked upon for some short-term trading impetus.
Technical levels to watch
Weakness below the 1.3300 handle is likely to get extended towards the 1.3275-70 intermediate support before the pair eventually drops to its next major support near the 1.3200 handle.
On the upside, 1.3380 level (session tops), closely followed by the 1.3400 handle, might continue to act as immediate resistance, above which a bout of short-covering could lift the pair towards 1.3435-40 supply zone.
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