GBP/USD faces hurdles around 1.2080 as US Inflation hogs the limelight

The GBP/USD pair is struggling to cross the immediate hurdle of 1.2080 and has marked its territory after a sheer downside move from the critical hurdle of 1.2130. The cable oscillates in a narrow range of 1.2068-1.2081 from the late New York session and is likely to remain topsy-turvy as investors are awaiting the release of the US Inflation.

Wednesday’s US Consumer Price Index (CPI) is likely to shift lower to 8.7% on an annual basis as oil prices have remained vulnerable in July. Accelerating recession fears in the Western economies and China have trimmed the demand forecasts vigorously, forcing market participants to dump oil longs.

The investing community is aware that the volatile oil prices drove the price rise index higher. Now, downbeat oil prices are diminishing the inflation forecasts and the continuation of a 75 basis point (bps) rate hike odds by the Federal Reserve (Fed). While the core CPI that doesn’t inculcate volatile oil and food products is expected to elevate to 6.1% from the prior release of 5.9%.

On the UK front, investors are awaiting the release of the Gross Domestic Product (GDP), which is due on Friday. The economic data is expected to plummet to 2.8% vs. 8.7% reported earlier on an annual basis. An occurrence of the same will send the pound bulls on the back foot.

But before that, the release of the British Retail Consortium (BRC) Like-For-Like Retail Sales holds significant importance. The economic data may plunge sharply to -8.4% vs. -1.3% reported last month. A significant drop in Retail Sales, in times when the inflation rate is accelerating, displays that the decline is higher than the absolute and relative plunge. Higher inflation should elevate Retail Sales data but a decline vulnerable retail demand in the economy.