GBP/USD Holds Above 1.2800 as Traders Eye U.S. CPI Data
GBP/USD is trading at 1.2812, steady in early U.S. session trade after rebounding from an intraday low of 1.2785. The pair remains supported by strong U.K. wage growth data and softer U.S. Treasury yields, keeping bullish momentum intact ahead of tomorrow’s U.S. CPI release.
Support and Resistance Structure
Immediate support is seen at 1.2780, with secondary support at 1.2740, aligned with the 20-day moving average. On the upside, the next resistance levels are 1.2845 and 1.2890. A daily close above 1.2890 would open the door for a retest of 1.2950, last seen in early July.
Economic Drivers and Policy Divergence
The Bank of England has signaled a cautious approach to rate cuts, with markets now pricing only a 38% probability of a September cut. This contrasts with the U.S. Federal Reserve, where markets expect an 88% chance of a September rate cut following weaker ISM Services data at 50.1. This policy divergence is helping maintain sterling’s resilience against the dollar.
U.S. CPI in Focus for Volatility
Traders are positioning for the July U.S. CPI data, which is expected to show headline inflation at 3.2% YoY and core at 3.3% YoY. A softer reading could accelerate dollar selling and lift GBP/USD toward the 1.2890–1.2950 zone, while a stronger print could trigger a pullback toward 1.2740.
Technical Outlook and Momentum
RSI on the daily chart stands at 57, leaving room for further upside without being overbought. The pair remains above its 50-day moving average at 1.2725, reinforcing the bullish bias. A sustained break below 1.2740 would neutralize the short-term outlook.
Trading Playbook for GBP/USD
Short-term traders should look for long entries on dips toward 1.2780–1.2800 with stops under 1.2740, targeting 1.2845 and 1.2890. Momentum traders can buy a confirmed breakout above 1.2890 toward 1.2950. Any break below 1.2725 would shift the bias to neutral.
Verdict on GBP/USD at 1.2812
Rating: Buy on Dips. With strong U.K. fundamentals, policy divergence favoring the pound, and upcoming U.S. CPI as a potential bullish catalyst, the pair has room to test 1.2950 in the near term. A break below 1.2740 would warrant a reassessment to a hold stance until a fresh bullish base forms.
