GBP/USD drifts into negative territory, refreshes session lows in pre-Fed trading action

   •  UK CPI falls to 21-month lows and prompts some GBP weakness.
   •  Brexit uncertainties offset USD weakness and add to the selling bias.
   •  Investors now eye the latest FOMC decision for some fresh impetus.

The GBP/USD pair extended its intraday retracement from session high level of 1.2679 and has now drifted into negative territory. 

Despite the prevalent US Dollar selling bias, the pair failed to capitalize on the early uptick and was further weighed down by some softness in the British Pound following the release of the latest UK consumer inflation figures.

In fact, the headline UK CPI eased to 2.3% y/y rate in November, marking its lowest level since March 2017, and underscored the case for the BoE to hold off on further policy tightening, when it announces its decision on Thursday.

Meanwhile, the latest leg of a sudden fall over the past hour or so coincided with the UK PM Theresa May's comments, saying that we are still working with the EU to seek those assurances that the parliament wants.

May's comments revived concerns about the political deadlock over the UK efforts to exit the European Union and seemed to be the only factor prompting some fresh selling around the Sterling.

It would now be interesting to see if the pair is able to find any support at lower levels as market participants start repositioning for the upcoming event risk - the highly anticipated FOMC monetary policy update.

Technical levels to watch