GBP/USD sticks to modest intraday gains, around 1.3820 region post-UK CPI

The GBP/USD pair refreshed daily tops, around the 1.3820-25 region following the release of the latest UK CPI report, though lacked any follow-through buying.

The pair showed some resilience below the 1.3800 mark on Wednesday and staged a modest bounce from support marked by the lower boundary of an ascending trend channel extending from August swing lows. The uptick allowed the GBP/USD pair to stall the previous day's sharp retracement slide from the 1.3910-15 region, or the highest level since August 6 touched in reaction to the softer US CPI report.

The GBP/USD pair held on to its modest intraday gains after stronger-than-expected UK consumer inflation figures. In fact, the headline CPI accelerated to 0.7% in August as against 0.5% anticipated and a flat reading in the previous month. The rate of inflation over the past year also surpassed market expectations and jumped 3.2% during the reported month from 2% in July.

The positive data, however, did little to impress bulls traders or provide any meaningful impetus to the GBP/USD pair amid a modest US dollar strength. Despite signs of easing inflationary pressure, investors seem convinced that the Fed could begin rolling back its pandemic-era stimulus later this year. This, along with rebounding US Treasury bond yields, underpinned the greenback.

Hence, it will be prudent to wait for some strong follow-through buying before positioning for any further appreciating move for the GBP/USD pair. Traders now look forward to the US economic docket, featuring the releases of the Empire State Manufacturing Index, Industrial Production and Capacity Utilization Rate for some impetus later during the early North American session.

Technical levels to watch