GBP/USD erases early gains, turns flat on the day near 1.2720

The GBP/USD pair, which was able to stage a modest recovery on the back of UK labour market data on Tuesday, struggled to preserve its bullish momentum today and turned flat near 1.2720 after touching a daily high of 1.2759. 

In the absence of macroeconomic data releases from the UK, the greenback's market valuation drove the pair's price action. After dropping to a daily low of 96.59 following the mixed inflation report from the U.S., the US Dollar Index changed its direction and was last seen adding 0.08% on the day at 96.79.

The U.S. Bureau of Labor Statistics today announced that the Consumer Price Index rose 1.8% on a yearly basis in May to miss the market expectation of 1.9%. More importantly, the core CPI that strips volatile energy and food prices ticked down to 2.1% annually and stayed unchanged at 0.1% on a monthly basis.

Commenting on the data, "The May CPI print disappointed modestly to the downside on the back of a softer increase in core inflation," TD Securities analysts said. "However, key services components suggest underlying prices remain firm. We believe details in the report should bring relief to Fed officials as some of the factors mentioned as transitory appear to be less of a drag in prices."

Meanwhile, Jeremy Hunt, one of the candidates to succeed British Prime Minister Theresa May, today said that parliament was likely to block a no-deal Brexit but failed to help the British pound find demand. 

Technical levels to watch for

The pair could find the initial resistance at 1.2760 (Jun. 12 high) ahead of 1.2845 (50-DMA) and 1.2910 (200-DMA). On the downside, supports are located at 1.2715 (Jun. 12 low), 1.2680 (20-DMA) and 1.2600 (May 23 low).