GBP/USD sticks to modest gains around mid-1.2600s, moves little after UK CPI

   •  Fails to capitalize on early up-move, despite persistent USD selling bias.
   •  UK CPI matches expectations and does little to provide any impetus.
   •  Investors’ focus remains glued to the latest FOMC monetary policy update.

The GBP/USD pair held on to its mildly positive tone, around mid-1.2600s, and had a rather muted reaction to the latest UK CPI print. 

Having failed to capitalize on its early up-move, the pair retreated around 30-pips from an intraday high level of 1.2679 and moved little following the release of mostly in-line UK consumer inflation figures. Data released this Wednesday showed that the headline and core CPI eased in November to 2.3% and 1.8% y/y rate respectively.

The downside, however, is likely to remain cushioned amid the prevalent selling bias surrounding the US Dollar, which continues to be weighed down by uncertainty over the Fed's rate hike path in 2019. Hence, investors are likely to wait for the latest FOMC monetary policy update before positioning for any meaningful short-term momentum play.

Technical levels to watch

Any subsequent retracement is likely to find support near the 1.2620 level and is closely followed by the 1.2600 handle, below which the pair might turn vulnerable to head back towards challenging the key 1.2500 psychological mark.

On the flip side, the 1.2680-1.2700 region now seems to have emerged as a stiff resistance, which if cleared decisively might trigger a short-covering bounce towards the 1.2770-75 supply zone en-route the 1.2800 round figure mark.