GBP/USD Forecast: Turning Bearish Again? UK CPI In Focus

On Monday, the GBP/USD pair once again failed to sustain its early up-move beyond the 1.3300 handle and snapped five consecutive days of winning streak. The pair came under some selling pressure following the release of a better-than-expected Empire State Manufacturing Index. The selling pressure aggravated in the wake of a Bloomberg report, which was noted saying that the Brexit negotiations could be headed for a catastrophic breakdown if the EU refuses to compromise. 

The pair subsequently dropped to an intraday low level of 1.3225 but managed to rebound few pips. Currently holding steady around mid-1.3200s, investors now look forward to the latest UK inflation figures for fresh impetus. The headline CPI is expected to jump to 3% y-o-y in September and would reaffirm BoE rate hike move in November, which should eventually provide a minor lift to the British Pound.

The technical picture, however, has failed to indicate any clear directional bias and hence, it would be prudent to wait for a strong follow-through buying interest beyond the 1.3300 mark before positioning for any additional near-term gains. On a sustained move above the mentioned handle, the pair seems more likely to surpass 1.3340 intermediate resistance and aim towards reclaiming the 1.3400 handle.

Alternatively, weakness below 1.3225-20 immediate support could drag the pair below the 1.3200 handle towards its next support near the 1.3180-75 region. A follow-through selling pressure would turn the pair vulnerable to break below the 1.3100 handle and head towards testing 1.3070-65 horizontal support.