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>>GBP/USD Maintains Key 1.3400 Support While the Pound Falters Ahead of Crucial US CPI Data

GBP/USD Maintains Key 1.3400 Support While the Pound Falters Ahead of Crucial US CPI Data

crypthub

about 5 hours ago

Current Market Situation

The pound remains under pressure against a sturdy US dollar, with GBP/USD hovering just above the 1.3400 psychological support. Traders are holding back major bets as they await the US Consumer Price Index (CPI) release. Volume is thin and price action stays range‑bound ahead of the data.

Technical Outlook

The 1.3400 level has acted as both support and resistance this quarter; a close below could open a slide toward 1.3320. A bullish CPI reaction may push the pair to test resistance near 1.3480 and the stronger 1.3550 zone. The 50‑day and 200‑day moving averages sit just above price, while the four‑hour RSI sits near neutral, indicating limited momentum.

Policy Divergence

Market sentiment revolves around a perceived policy gap: the Fed is expected to stay “higher for longer,” while the Bank of England appears more dovish after soft UK retail sales and growth concerns. The stronger US labor market and sticky inflation keep the dollar attractive. Consequently, capital tends to flow toward the currency backed by the more hawkish central bank.

CPI Impact and Risks

Traders will focus on core CPI, which excludes food and energy; a reading at or below consensus may ease Fed hike expectations and weaken the dollar. An upside surprise, especially in services inflation, could reinforce the dollar and test the 1.3400 support. Historical moves show a 1.5‑2.5% range expansion on CPI days, and elevated short‑positions on the pound could trigger a rapid short‑cover rally.