GBP/USD forecast: Bulls await a move beyond 100-DMA, UK data/BoE eyed for fresh impetus

With investors looking past the latest Brexit optimism, the GBP/USD pair struggled to find acceptance above the key 1.2500 psychological mark and witnessed a modest pullback from multi-week tops on Tuesday. The lack of progress to solve the Irish backstop issue held investors from placing any fresh bullish bets rather prompted some profit-taking on Tuesday. The intraday downtick accelerated further following the release of softer-than-expected UK consumer inflation figures. In fact, the headlines CPI slowed notably to 1.7% yearly rate in August and marked the lowest rate since December 2016. Adding to this, the core CPI also missed market expectations and dropped to 1.5% yearly from the previous month's reading of 1.9%.

Hawkish Fed cut added to softer UK CPI-led intraday downtick

The pair did witness some intraday recovery and attempted a fresh move beyond the mentioned handle, albeit quickly ran out of the steam following the highly anticipated FOMC decision. As was widely expected, the Fed lowered interest rates by another 25 bps on Wednesday but raised questions about another rate cut in 2019. The so-called dot-plot showed that the median projections of the federal funds rate would be at present levels through the end of 2020, suggesting that the Fed might have already done with its mid-cycle adjustments. Moreover, there were several dissenting votes, James Bullard wanted to cut 50 bps cut while Esther L. George and Eric S. Rosengren preferred to stand pat, implying that further rate reductions were not guaranteed and provided a goodish lift to the US Dollar.
 
Despite the two-way price action, the pair remained well within the previous session's broader trading range and continued showing some resilience at lower levels. The pair finally ended the day comfortably above mid-1.2400s, with only modest losses, and ticked higher during the Asian session on Thursday as the focus now shifts to the latest BoE monetary policy update. Apart from this, the UK monthly retail sales data and the final verdict on the three-day-long hearing on whether the UK PM Boris Johnson acted unlawfully while proroguing the parliament might further influence the broader market sentiment surrounding the Sterling, which might help traders grab some short-term opportunities.

Short-term technical outlook

From a technical perspective, the pair needs to find acceptance above the 1.2500 handle – coinciding with 100-day SMA – to increase prospects for any further near-term appreciating move towards the 1.2560-65 region – a resistance marked by 50% Fibo. level of the 1.3177-1.1959 downfall. Momentum beyond the mentioned barrier could get extended beyond the 1.2600 round-figure mark, towards testing the next major confluence region near the 1.2700-20 region - comprising of 61.8% Fibo. level and the very important 200-day SMA.
 
On the flip side, immediate support is pegged near 38.2% Fibo. level - around the 1.2420 region - and is closely followed by the 1.2400 handle and the 1.2380 horizontal zone. Failure to defend the mentioned support levels might trigger some technical selling and accelerate the slide further towards the 1.2300 round-figure mark, though is likely to attract some dip-buying interest and help limit further downside near mid-1.2200s – 23.6% Fibo. level.