GBP/USD Bulls take foot off the gas below 1.3900

• GBP/USD slips from the highs as the UK CPI impact tails off a touch into consolidation.
• Cable traders are weighing both the Fed and the BoE along with the risks of Covid.

GBP/USD is trading on the bid by some 0.4% from between a low of 1.3801 and a high of 1.3891 as the greenback slides with markets repricing central banks.

First and foremost, the pound climbed against the greenback following UK inflation data that climbed more than expected.

The data moved to its highest in almost three years and investors reprised their positioning around Bank of England expectations.

Inflation jumped in June further above the BoE's 2% target to hit 2.5%, its highest since August 2018. 

Meanwhile, despite the prior day's US inflation data huge beat, the Fed's chairman, Jerome Powell, said in remarks prepared for Congress that the US economy was "still a ways off" from levels the central bank wanted to see before tapering its monetary support.

Casting eyes back over the June Consumer Price Index from the prior day, this came in much higher than expected, with headline rising 5.4% YoY vs. 4.9% and 5.0% in May and core rising 4.5% YoY vs. 4.0% expected and 3.8% in May.  

This was the fourth month of upside inflation surprises which means that the transitory argument is getting harder and harder to sustain.

However, the US 10-year benchmark has levelled out to a 1.3630% low today following Powell's comments.

Domestically, however, the pound's support could well be limited considering the risks surrounding the opening of the economy despite the higher risk of the Delta variant. Investors will be on edge.

Moreover, the removal of stimulus measures such as a cut to stamp duty and the end of the furlough scheme for workers is a headwind for the economy.