GBP/USD off UK CPI-led swing lows, still weaker around 1.31 mark

   •  Latest UK CPI print prompts fresh selling.
   •  Weaker USD lends some support. 
   •  Focus shifts to Wednesday’s UK labor market report.

The GBP/USD pair stalled its UK CPI-led downslide and rebounded around 20-pips from session lows, albeit held weaker marginally below the 1.3100 handle.

A fresh wave of GBP selling emerged during the early European session on Tuesday after data released from the UK showed headline CPI held steady at 3% y-o-y in October. Steady readings indicated a probable peak for inflation and exerted some fresh selling around the British Pound.

However, the prevalent weaker sentiment around the US Dollar, led by persistent worries over the US tax overhaul legislation and subdued US Treasury bond yields, helped limit deeper losses, at least for the time being.

Meanwhile, the pair had a rather muted reaction to the Fed Chair Janet Yellen and the BoE Governor Mark Carney's comments at an ECB-hosted conference, with the latest UK political developments and growing frustration over the lack of progress in the Brexit negotiations exerting some downward pressure for the second consecutive session.

Later during the NA session, the release of US PPI print would be looked upon for some impetus, but the key focus would now be on Wednesday's important macro releases - UK jobs report, followed by the latest inflation figures and monthly retail sales data from the US. 

Technical levels to watch

A follow-through weakness below post-BoE swing lows support near the 1.3040 region is likely to accelerate the slide towards the key 1.30 psychological mark.

On the upside, any recovery moves beyond the 1.3110 level might continue to confront some fresh supply near the 1.3125-30 region, which if cleared might trigger a short-covering bounce back towards the 1.3200 handle.