GBP/USD Analysis: Post-US CPI USD selloff helped defend 100-DMA, for the time being

• GBP/USD attracted some dip-buying on Tuesday amid the post-US CPI USD selloff.
• The US bond yields fell to three-week lows and further undermined the greenback.
• Bulls might wait for a move beyond the 1.3825-30 region before placing fresh bets.

The GBP/USD pair witnessed some intraday selling on Tuesday, albeit showed some resilience below the 1.3700 mark and recovered around 75 pips from daily lows amid some heavy US dollar selling. The British pound initially was weighed down by a rather unimpressive UK GDP report, which showed that the economy expanded by 0.4% in February as against 0.6% anticipated. This comes on the back of a possible link between the AstraZeneca coronavirus vaccine and a rare blood clotting disorder that could delay the UK government's plan to reopen the economy. The pair lost some additional ground after the Bank of England (BoE) announced that Chief Economist Andy Haldane will quit his position and step down from the Monetary Policy Committee (MPC) after June's meeting.

On the other hand, the USD witnessed a dramatic turnaround and tumbled to three-week lows following the release of US consumer inflation figures. The headline CPI recorded the biggest increase since August 2012 and rose 0.6% in March. The yearly rate accelerated to 2.6% versus 1.7% in the previous month. The readings were stronger than consensus estimates, though were not evident of broadening price pressures. This, in turn, triggered a fresh leg down in the US Treasury bond yields and prompted some aggressive selling around the USD. Meanwhile, the US Food and Drug Administration (FDA) halted the use of Johnson & Johnson's coronavirus vaccine amid rare and severe blood clots issues. This aggravated the USD bearish pressure and provided a modest lift to the pair.

The USD remained depressed through the Asian session on Wednesday, which allowed the pair to gain some follow-through traction for the third straight day and climb to near one-week tops. In the absence of any major market-moving economic releases, either from the UK or the US, the pair remains at the mercy of the USD price dynamics. Later during the US sessions, a scheduled speech by Fed Chair Jerome Powell will influence the greenback and produce some meaningful trading opportunities around the major.

Short-term technical outlook

From a technical perspective, the pair, so far, hasn't been able to find acceptance below the 50% Fibonacci level of the 1.3135-1.4243 positive move and managed to defend 100-day SMA support. From current levels, any subsequent positive move might confront some resistance near the 1.3800 mark. This is closely followed by the 38.2% Fibo. level, around the 1.3825-30 region, which if cleared decisively will negate the near-term negative bias. The pair might then accelerate the momentum back towards the 1.3900 mark before eventually climbing to monthly tops, around the 1.3920 area.

On the flip side, any meaningful pullback might continue to find decent support near the 1.3700 mark, or 50% Fibo. level. Some follow-through selling, leading to subsequent weakness below 100-day SMA will shift the bias back in favour of bearish traders. This, in turn, will set the stage for an extension of the recent downward trajectory and drag the pair towards the 1.3635-25 intermediate support, en-route the 1.3600 mark. The downfall could further get extended towards the 61.8% Fibo. level, around the 1.3560-55 region.