|

GBP/USD reverses a dip below 1.2700 on UK CPI

  • Upbeat UK annualized CPI figures offer some impetus to the GBP bulls.
  • The bounce appears short-lived amid stronger US dollar and moderate risk-aversion.
  • Cable might derive support from downbeat US retail sales report.

The GBP/USD pair reversed a knee-jerk dip to fresh session lows at 1.2698 following the release of the UK CPI report and regained the 1.27 handle, as markets digested the upbeat annualized CPI reading.

However, the bulls appear to lack momentum, as easing UK wage growth combined with steady inflation raise concerns over the UK economic growth prospects and BOE rate hike outlook.

Moreover, escalating tensions between the US and Turkey continue to dampen risk sentiment and weigh negatively on the risk currency, the GBP.  According to the latest report by CNN, one Turkish court rejected lawyer appeal to release the US Pastor Brunson from house arrest and for his travel ban to be lifted on Wednesday. Earlier today, Turkey doubles the tariffs on some US tariffs in response to the attacks on the economy by the US.

Cable also remains exposed to further downside risks amid Brexit uncertainty, especially after the Latvian Foreign Minister Rinkevics noted that the chances of a no Brexit deal now stands at 50-50.

With the UK data out of the way, the focus now shifts to the US retail sales report due at 1230 GMT, which is likely to show that the US retail volumes have dropped to 0.1% m/m in July versus 0.5% previous. Core retail sales are seen at 0.3% m/m versus 0.4% last.

GBP/USD Technical Levels

According to the AceTrader Research Team, “Today, y'day's break of last Fri's 1.2723 low to 1.2704 confirms MT fall has once again resumed, 'bullish convergences' on hourly indicators are likely to limit downside to 1.2670/75 n minor sup 1.26236 would remain intact. Only above 1.2760/64 signals temp. low is made n may risk stronger retrace to 1.2810/20.”

Author

Dhwani Mehta

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

More from Dhwani Mehta
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD holds steady below 1.1800

EUR/USD moves sideways in a narrow channel below 1.1800 as the market volatility remains low ahead of the New Year holiday. On Tuesday, investors will pay close attention to the minutes of the Federal Reserve's December policy meeting.

GBP/USD retreats below 1.3500 as trading conditions remain thin

GBP/USD corrects lower after posting strong gains in the previous week and trades below 1.3500 on Monday. With the action in financial markets turning subdued following the Christmas holiday, however, the pair's losses remain limited.

Gold holds above $4,300 after setting yet another record high

Spot Gold traded as high as $4,550 a troy ounce on Monday, fueled by persistent US Dollar weakness and a dismal mood. The XAU/USD pair was hit sharply by profit-taking during US trading hours and retreated towards $4,300, where buyers reappeared.

Crypto market outlook for 2026

Year 2025 was volatile, as crypto often is.  Among positive catalysts were favourable regulatory changes in the U.S., rise of Digital Asset Treasuries (DAT), adoption of AI and tokenization of Real-World-Assets (RWA).

Economic outlook 2026-2027 in advanced countries: Solidity test

After a year marked by global economic resilience and ending on a note of optimism, 2026 looks promising and could be a year of solid economic performance. In our baseline scenario, we expect most of the supportive factors at work in 2025 to continue to play a role in 2026.

Crypto market outlook for 2026

Year 2025 was volatile, as crypto often is.  Among positive catalysts were favourable regulatory changes in the U.S., rise of Digital Asset Treasuries (DAT), adoption of AI and tokenization of Real-World-Assets (RWA).