GBP/USD backslides on Monday, finds near-term floor at 1.2800

GBP/USD pared away some gains on Monday, falling from 1.2860 back into the 1.2800 price handle as markets trim rate cut expectations from the Bank of England (BoE). According to the Union Bank of Switzerland (UBS), the BoE is expected to deliver a first rate trim in August versus the previously-expected May.

Investors are looking ahead to Tuesday’s UK labor figures, followed by the US Consumer Price Index (CPI) inflation print. Markets continue to chew on hopes for a rate cut from the BoE and the Federal Reserve (Fed). 

The UK’s ILO Unemployment rate for the quarter ended January is expected to hold steady at 3.8%, while Average Earnings Including Bonuses for the annualized quarter ended in January are forecast to slip to 5.7% from the previous 5.8%. With Average Wages Excluding Bonuses expected to hold steady at 6.2%, markets expect consumers’ bonuses to decline.

US CPI Preview: Forecasts from 10 major banks, inflation still too high

February’s US MoM CPI print is expected to accelerate to 0.4% from 0.3% as uneven inflation continues to weigh. Core MoM CPI, which excludes food and energy prices, is expected to tick down to 0.3% from 0.4%. 

Annualized CPI is forecast to hold at 3.1% with Core YoY CPI expected to  come in at 0.3% versus the previous 0.4%.

GBP/USD technical outlook

GBP/USD is set to snap a winning streak, aimed to the downside on Monday after closing in the green for six consecutive trading days. The pair briefly broke out of the top side of a heavy supply zone, but failure to capture the 1.2900 handle on Friday is sending the GBP/USD back below resistance.

Despite near-term bearish momentum, the pair remains well above the 200-day Simple Moving Average (SMA) at 1.2586. The pair has climbed 3% bottom-to-top from the last major swing low into 1.2518.

GBP/USD hourly chart

GBP/USD daily chart