GBP/USD awaits UK Consumer Price Index for fresh moves

GBP/USD clings to 1.3000 while heading into the London open on Wednesday. The Cable has been in a 10-pip choppy range between 1.2995 and 1.3005 since the start of the Asian session. The reason to blame could be traced from the upcoming UK Consumer Price Index (CPI) data.

With the multi-year low British Unemployment rate closing doors for the BOE’s rate cut, traders are all eyes on the UK CPI data for January considering the central bank’s upward revision to price pressures. In regards to this, the BOE’s line "should indicators of domestic prices remain relatively weak" becomes the key. Markets anticipate a slight recovery in headline CPI (YoY) figure to 1.6% from 1.3%, lagging behind BOE’s 1.8% forecast.

Other than that, UK politics and Brexit will also be important to watch. While the newly appointed Chancellor’s readiness to present budget on March 11 shows the high-performance bar for the Tories, their “NO” sign to low-skilled workers applying for the British Visa is largely criticized. Elsewhere, the EU Brexit negotiator Michel Barnier again acted as the tough teacher and poured cold water on the UK’s call for Canada-style trade deal.

On the other hand, the market’s risk tone seems to improve between the receding cases of coronavirus infections and the surging death toll. To portray this, the US 10-year treasury bonds rise one basis point (bp) to 1.566% whereas stocks in Asia and S&P 500 Futures are also registering mild gains by the press time.

In addition to the UK CPI, US housing market numbers and the Producer Price Index will also be important to watch for.

Technical Analysis

While the recent Doji favors the pair’s pullback, 61.8% Fibonacci retracement of its November-December 2019 upside, at 1.3055, could lure the short-term buyers. However, the pairs’ declines below 100-day SMA, at 1.2945 now, can challenge the monthly bottom near 1.2870.