GBP/USD Forecast: US CPI might help to break through recent trading range

The US Dollar extended overnight slide led by sluggish inflation figures, which might now force the Fed to hold back from lifting rates further. Moreover, escalating tensions between the US and N. Korea continued driving investors to traditional safe-haven assets, including the US Treasuries, and further added to the greenback's woes through Asian session on Friday. 

Meanwhile, the GBP/USD pair on Thursday slipped to a three-week low, near mid-1.2900s, in wake of softer UK manufacturing production data and rising UK trade deficit. The pair, however, has managed to recover back to the key 1.30 psychological mark as market focus shifts to the headline US consumer inflation data for July, due for release later during the NA session.

Technically, the pair has managed to hold its neck above an important confluence support near the 1.2935-30 region, comprising of 50-day SMA and 50% Fibonacci retracement level of 1.2589-1.3269 recent up-swing, albeit has failed to register any meaningful recovery beyond the 1.30 handle. The pair has been confronting some fresh supply around the 1.3030 region and hence, it would prudent to wait for a decisive break through the three-day old trading range before positioning for the next leg of directional move. 

On a sustained move beyond 1.3030 immediate resistance is likely to trigger a short-covering rally that should assist the pair to move back towards reclaiming the 1.3100 handle, also coinciding with 23.6% Fibonacci retracement level. Alternatively, a decisive break through 1.2935-30 important support would turn the pair vulnerable to break below the 1.2900 handle and head towards testing 61.8% Fibonacci retracement level support near mid-1.2800s.